JAPAN | New strategy calls for review of electricity monopolies

Posted on July 30, 2011

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JAPAN | ASAHI SHIMBUN | 30 July 2011

The costs of nuclear and renewable power generation are expected to be recalculated as part of a new 40-year plan aimed at reducing Japan’s reliance on nuclear energy.

A draft energy and environment strategy, adopted by the government’s energy and environment conference on July 29, also calls for a review of the regional monopolies of Japan’s electricity companies and a possible separation of energy transmission from power generation.

And core energy policies, including Japan’s nuclear fuel recycling program, are also to be revisited.

Nuclear energy has until now been reckoned to be vastly cheaper than alternative energy sources like wind and solar power.

According to the current method of calculation, nuclear power generation costs 5 to 6 yen per kilowatt-hour, compared with 37 to 46 yen for solar power generation.

But the government plans to set up a committee within the energy and environment conference to rewrite the way it calculates the costs.

Nuclear power plant decommissioning costs and the compensation bill from the accident at the Fukushima No. 1 nuclear power plant are to be added to the estimates for nuclear power, while cheaper technology and the economies of scale from volume production will be factored into solar and wind energy estimates.

The revised calculations are expected to lead to a shift away from nuclear power and toward renewable energy.

The draft energy and environment strategy is significantly less radical than the grand vision presented by Prime Minister Naoto Kan on July 13, when he said he wanted to achieve a society without nuclear power plants.

After drawing fire from politicians and government officials, Kan was forced to back down on July 15, saying the nuclear phase-out was only his personal preference as opposed to government policy.

The draft strategy is the first policy statement from the Kan administration to call for a reduction of nuclear power plants.

Koichiro Genba, minister in charge of national policy and head of the environment and energy conference, said July 15 that the basic policy is to reduce Japan’s nuclear dependence, drawing a line from Kan’s stance.

The draft calls for a road map to reduce Japan’s dependence on nuclear power by around 2050 and proposes that energy supply be switched from the current centralized setup to a more geographically distributed network relying on smaller plants.

It also calls for a review of the restrictions on free electricity transmission across the country due to the different standards used in eastern and western Japan.

The Cabinet plans to approve a basic policy based on the draft strategy by the end of the year, but the lame-duck Kan administration is likely to meet significant opposition.

The electric power industry is expected to staunchly oppose a review of the electric power companies’ regional monopolies and separation of transmission business from the regional utilities.

Lawmakers originally from the former Democratic Socialist Party, supported by workers in the electric power industry, have strong influence within the ruling Democratic Party of Japan, and the opposition Liberal Democratic Party has had close ties with the electric power industry and a history of promoting nuclear power generation.

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