Japan’s Energy Struggles a Decade After Fukushima
On 11 March 2011, a magnitude 9.0 earthquake off the east coast of Japan triggered a tsunami which led to a meltdown at three reactors in the Fukushima Daiichi nuclear power plant. Fearful of further accidents, all 54 of the country’s nuclear plants were taken offline for safety checks. Nuclear power had accounted for almost 30% of the country’s electricity generation in 2010. In 2011, that share dropped to 14% and, as of last year, was down to less than 5%. Public support for the power source has yet to recover, and safety guidelines to restart nuclear power plants “are quite strict”, says Isshu Kikuma, energy analyst for Japan at BloombergNEF in Tokyo.
Prior to the Fukushima incident, Japan had planned to increase the share of nuclear to as much as 50% of its power supply by 2030, says the World Nuclear Association. Ten years later, the country is still trying to find its way forward on energy, battling with the dual pressures of climate change mitigation and security of supply. Its mountainous and forested terrain, and proneness to earthquakes, compound the challenge.
Go deeper with GlobalData
Ascendant fossil fuels
The abrupt nuclear shutdowns after Fukushima led to rolling blackouts that highlighted the fragility of the country’s power system, with a monopolistic structure favouring large utilities. It saw older oil-fired plants resuscitated with generation from them rising six percentage points from 2010, to 14%. Natural gas output rose a similar amount year-on-year to 35% of the power mix in 2011, according to GlobalData.
This trend has continued. In 2010, fossil fuels generated around 60% of Japan’s power, soaring to 88% in 2012, Kikuma says. As of 2019, that share stood at 72%, he adds. Existing fossil fuel plants have increased their output and new plants have come online. “Japan is still building coal plants,” Kikuma says, adding that these are “pipeline projects from a long time ago”.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAt a time when the world is focused on reducing emissions, Japan’s average grid power-related emissions are moving in the wrong direction. In 2010, before the accident, they stood at 429g of CO2 per kilowatt hour; by 2017, they were up 15% to 496g, having peaked at 572g in 2013.
Nuclear to the rescue
Keisuke Sadamori, director of energy security and markets at the International Energy Agency (IEA), says the quickest way for Japan to cut its emissions is to get its nuclear plants back online. “It has to use existing nuclear [plants], otherwise it is a waste of money,” he says, adding that extending their lifetime is the cheapest form of low-carbon electricity in Japan – even with the falling cost of renewable technologies.
The hold-up is related to new safety requirements to bolster protection against terrorist attacks, Sadamori says. Only nine nuclear reactors have restarted and these are all pressurised water reactors, says the World Nuclear Association. Fukushima Daiichi was a different, boiling water reactor type.
“As a semi-domestic energy resource, nuclear power is highly efficient and highly stable, emits no CO2 during power generation and is distributed throughout the country,” says a spokesperson for TEPCO, which operates 17 nuclear reactors in Japan, including Fukushima Daiichi. “For Japan, which has few natural resources, nuclear power is indispensable to achieve a carbon-free society and power supply resilience.”
Beyond nuclear power
As it plans its energy future, Japan is under growing international pressure to up its game on climate change. In October last year, following its peers, Japan’s government pledged to become a net-zero emissions economy by 2050. This move was immediately followed with a widely criticised loan from the state-owned Japan Bank for International Cooperation for a supercritical coal project in Vietnam. The deal was followed this year with an LNG project in Mozambique, from which Japanese utilities will receive around 30% of production.
While no specific policies have yet been announced to help the country achieve its ambitious net-zero goal, Sadamori says it is clear the government will have to invest more in the research and development of new technologies.
For Japan, which has few natural resources, nuclear power is indispensable to achieve a carbon-free society and power supply resilience. A spokesperson, TEPCO
“To achieve net zero globally by 2050, around half of the emission reductions [required] will come from technologies that are not commercially available at this moment,” he says, citing IEA research. These include hydrogen, carbon capture use and storage, and low-carbon fuels.
The world is seeing a rapid increase in wind and solar power, he adds, “but we need to be sure energy security can be maintained”. In early January 2021, power reserve margins dipped below 3% in Japan on some days, says Sadamori. “It was cold, but not exceptionally [so]. Blackouts were avoided, but the margins were thin. There is a potential risk with higher [shares of] wind and solar in the system.”
Sadamori insists this risk is not unique to Japan, and that governments and regulators need to improve market design to ensure flexibility and sufficient capacity.
45% renewables by 2030
Despite the challenges that Japan’s geography presents, not everyone thinks renewable energy development will be limited.
“Expansion of renewable energy could play a big role, especially by utilising offshore wind potential,” says Hitoshi Kaguchi from Mitsubishi Heavy Industries. “Japan, however, is not blessed with favourable geography or advantageous natural conditions for renewables, and the demand for energy is huge. Therefore, in the electricity sector, not only renewables but also a range of [other] technologies, including nuclear, decarbonised fossil power generation and carbon-free fuels, such as hydrogen and ammonia, need to be deployed to make the energy transition a reality.”
TEPCO says it is discussing Japan’s future energy mix with the national government. “We are aware that in addition to nuclear power, global expectations for renewables, such as solar and wind power, are growing,” says the power company. TEPCO aims to develop 6–7GW of new renewable energy by the first half of the 2030s and to make renewables the country’s primary source of power.
Renewable energy is already on track to account for 30% of Japan’s power mix by 2030, says Mika Ohbayashi, director of the Tokyo-based Renewable Energy Institute (REI). This is higher than government estimates, she adds. The organisation wants the government to up the 2030 renewables target to 45%, primarily through the expansion of wind and solar power. This scenario also sees natural gas increasing to 54% of the power mix over the next decade, before phasing down.
“Japan’s renewable energy cost is still a bit expensive,” she says. “[But] a massive increase in renewable energy is key to 2050 – and the cost will come down as there is more uptake.”
From feed-in for solar to tenders for offshore wind
In 2012, Japan introduced a feed-in tariff for renewable energy, over 20 years. This spurred the growth of solar, with a high subsidy of Y40 ($0.37) a kilowatt-hour (kWh) – higher than the global average, says Kikuma. As of 2020, the country had an installed capacity in excess of 72GW of solar power, “from virtually nothing pre-Fukushima”, he says.
However, this high subsidy disincentivised developers from lowering costs, helping make Japan’s renewables some of the most expensive in the world, Kikuma adds. Project scale-up is also challenged by Japan’s mountainous and forested topography, with some municipalities opposing renewable energy projects as they would entail deforestation. Finally, the high frequency of natural hazards, such as earthquakes, pushes up insurance and building costs.
While the feed-in tariff for solar power has been dramatically reduced – to Y12/kWh for systems of 50–250kW in 2020 – the government is taking a different approach for offshore wind, seen as the next big thing for the country. In a quest to approve 1GW of offshore wind every year to 2030, the government will be hosting tenders for sites.
“Offshore wind is about to take off,” says Kikuma, adding that the government wants to reach 30–45 GW by 2040. “Japan is keen to expand offshore wind even though it only has about 20MW.” The sizeable tenders show the government’s commitment, he adds.
Investors and the incumbent utilities look favourably upon offshore wind, says Ohbayashi, but there are challenges to integrating planned developments into the grid. Connection conditions are not favourable for renewables, she says, citing curtailment requirements when demand is low as one example.
Furthermore, the energy system is in desperate need of digitalisation. Kyushu Electric Power still sends faxes to solar PV operators to notify them when to begin curtailment procedures, Ohbayashi says.
Part of the challenge is the monopolistic structure in Japan’s electricity market, she explains. Generation and transmission were only unbundled last year, “but there is still no real independent operating system”. The urgent need to change the market’s structure and functioning make the 2050 goal “very difficult” to achieve, she says.
Enter hydrogen
Regulations are slow to change “but what is happening on the ground is not slow”, Ohbayashi points out. The past decade has seen the share of renewables double. REI argues this needs to ramp up to 45% by 2030 and then double again by 2040. This assumes a drop in demand of at least 20% by 2050 due to an equivalent drop in population, and efficiency gains as a result of widespread electrification.
Green hydrogen is also a key part of REI’s modelling, and hydrogen in general is widely expected to play a big role in Japan’s low-carbon future. “Just decarbonising the grid and power will not be enough,” says Zane McDonald, a hydrogen technology expert at S&P in New York, highlighting a need to address emissions from industry and transport as well. “Hydrogen does offer that solution.”
But every kilowatt hour of renewable energy used for hydrogen production means one fewer for the grid, so there needs to be a balanced approach, he adds.
Japan is a case study for a lot of the challenges hydrogen faces before it can go mainstream. Zane McDonald, S&P
“There is an existing market for hydrogen in Japan, but it is largely reliant on imported fossil fuels,” says McDonald. An estimated 4.2 million tonnes of hydrogen are consumed annually in the country, predominantly by refineries, and the bulk of it is produced from either natural gas or coal, he says. “Another challenge unique to Japan is its [lack of] access to storage sites for captured carbon,” he adds, making domestic blue hydrogen production harder.
“Japan is a case study for a lot of the challenges hydrogen faces before it can go mainstream,” sums up McDonald. Other hurdles include a lack of access to domestic energy sources to produce it and how to transport it.
One solution being discussed is the potential to import hydrogen from Australia, but this would be expensive and, as McDonald and Ohbayashi point out, it would be brown hydrogen from coal, at least at the start. An alternative could be to exploit the “huge” renewable energy potential of central Asia. Imports from there could be cheaper than pursuing a domestic hydrogen industry, Ohbayashi suggests.
Yet another option would be to import hydrogen in the form of ammonia, says McDonald – and use it to fuel the ship.
“We see the use of ammonia as an effective step towards a hydrogen society, especially in countries like Japan where gas infrastructure such as pipelines is not as established as in Europe or the US,” agrees Mitsubishi’s Kaguchi. “With its potential as a hydrogen carrier and as a carbon-free fuel, we believe ammonia could be a path to the hydrogen society.”
However, he acknowledges that in the “early days” hydrogen production will remain costly, and it will be necessary to establish transportation and storage infrastructure, as well as manufacturing facilities, to realise a hydrogen economy.
Coming up: A new energy policy
Later this year, the government is expected to put forward a new energy policy, which will lay out long-term targets. Given that its goal of 22–24% renewables in the power mix by 2030 has already almost been met, BNEF’s Kikuma expects a higher target to be tabled, of around 30–40%. He would like to see further interim targets out to 2050. In addition, the net-zero goal could yield new energy policies, such as tax breaks for wind turbine manufacturers, he adds.
“The government needs to consider a way to incentivise low-carbon technologies in a technology-neutral way,” says Sadamori from the IEA. “That should be an important part of the energy policy discussions.”
Given the lack of energy resources in Japan, people are nervous about future energy security, says Sadamori. However, Japan excels at innovation, he adds, citing energy efficiency improvements in response to the 1970s oil shocks. “This is an opportunity to improve and develop [and] find new energy solutions,” he says. “Energy resources lie in people’s brains. We are starting to see [progress], but the level of the challenge is high.”
Energy Monitor is publishing a series of articles about nuclear power and the energy transition to mark the tenth anniversary of the Fukushima Daiichi disaster in Japan. The earthquake and tsunami led to a sea change in the role of nuclear power around the world. In Japan, nuclear plants made up less than 5% of the electricity mix last year, down from 30% before Fukushima. In Germany, the accident led to the immediate shutdown of eight nuclear plants and the definitive decision to exit nuclear power entirely by 2022. Ten years later, as countries face up to the climate crisis, Energy Monitor examines the role of nuclear power in the energy transitions in Japan, the US, China, France, and the EU.
Other articles in this series:
- Will there be a second act for the US nuclear power industry?
- Will China gamble on a nuclear future?
- France still hedging its bets over nuclear industry future
- Brexit may tip the scales towards an EU nuclear phase-out
