Harmonizing Nuclear Energy with Deregulation
Japan's first Basic Energy Plan was decided by the country's
Parliamentary Cabinet on October 7, 2003, and was subsequently
reported to the National Diet. The Plan, which was formulated
in accordance with the Basic Law on Energy Policy Making enacted
in June 2002, describes the country's overall energy policy for
three basic objectives:
1) securing stable supply; 2) ensuring environmental compatibility;
and
3) increasing the role of market principles. The application of
market principles must be consistent with the first two principles.
Nuclear energy is defined as a semi-domestic energy source in
the Basic Energy Plan because nuclear fuel is easy to store; the
reprocessing of spent fuel promotes the effective use of resources;
and nuclear power emits virtually no carbon dioxide. The Plan
clearly states that "Nuclear power generation, including
the nuclear fuel cycle, will be promoted as a key power source,
based on the premise that safety will be guaranteed."
As confirmed in the Basic Energy Plan and stated in the
Atomic Energy Commission's Long-Term Program for Research, Development
and Utilization of Nuclear Energy, the promotion of nuclear power
is a vital component of Japan's energy policy in terms of security
of stable supply and environmental compatibility. Once a closed
nuclear fuel cycle has been established within our country, energy
resources will be efficiently utilized and long-term energy security
will be enhanced.
Therefore, the establishment of a domestic nuclear fuel cycle
has been promoted as Japan's fundamental stance since the beginning
of our country's nuclear development. Electric power companies
in Japan have promoted the use of nuclear energy, including the
nuclear fuel cycle, in accordance with the important energy policies
of Japan. Private companies have been proceeding with their business
operations in specific areas, such as power generation, as they
are able to carry out these operations efficiently. As for the
nuclear fuel cycle, Japan Nuclear Fuel Limited (JNFL), financed
by electric power companies and others, is preparing for the start-up
of the commercial operation of a reprocessing plant in July 2006
in Rokkasho Village, Aomori Prefecture. This will be JNFL's main
operation.
The Electricity Utility Industry Law was revised in June 2003,
and the energy retail market will be further liberalized after
April 2005. The private sector will continue to proceed with the
Rokkasho reprocessing project, while at the same time, preparations
to make nuclear energy viable in the deregulated market continue.
However, in order to promote a closed nuclear fuel cycle, the
so-called back-end work, e.g. reprocessing operations and the
treatment and disposal of radioactive waste, involves much more
time compared with other industries and power sources. In addition,
these operations face many uncertainties, as this is the first
commercial reprocessing project ever undertaken in Japan. Business
risks involving new projects would have been averted under the
traditional regulated system, but such risks might not be fully
avoided in the new liberalized power market. For this reason,
concrete measures and systems, including economic steps, are indispensable,
based on the characteristics of back-end operations.
In order to analyze and evaluate the back-end project cost structures
and the profitability of nuclear business to discuss such measures
and systems, the Subcommittee to Study Costs and Other Issues
has held several meetings. The Subcommittee was set up within
the Electricity Industry Committee, which is the advisory body
to the Minister of Economy, Trade and Industry. The Federation
of Electric Power Companies (FEPC) reported to the committee the
latest overall back-end operation estimate costs, which total
18.80 trillion yen. The closed nuclear fuel cycle costs account
for roughly 20 percent to 30 percent of the entire nuclear power
generation costs; and the costs of the back-end work, a part of
a closed nuclear fuel cycle, cover approximately 10 percent to
20 percent. Trial calculations have been made on nuclear and other
power generation costs, based on the back-end cost estimate. It
was concluded that nuclear power generation cost per kilowatt
hour is as economical as that of other power sources.
Power Generation Cost/kWh |
(yen/kWh; Utilization rate: 80%) |
Example 40-year operation period;
discount rate: 3% |
Oil-fired |
LNG-fired |
Coal-fired |
Nuclear
(back-end) |
10.7 |
6.2 |
5.7 |
5.3
(0.81) |
|
The Subcommittee determined that the FEPC made reasonable trial
calculations at the present time, and calculated that nuclear
power is as profitable as other power sources. On the other hand,
this estimate is still a forecast for every back-end operation
in the future and, therefore, the committee also pointed out that
there are many technical and regulatory uncertainties in the back-end
business.
On the basis of the final report of the Subcommittee, measures
and systems will be discussed in the Electricity Industry Committee
so that the private sector will be able to carry out back-end
work smoothly. The conclusion will be made and such systems and
measures are to be implemented by the end of 2004.
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