March 31, 2016 / 6:40 AM / 3 years ago

Japan nuclear dilemma to undercut power reforms

TOKYO (Reuters) - Japan’s utilities are reserving capacity for nuclear power on their grids even though all but two of the nation’s reactors remain closed with little prospect of many others restarting, according to a Reuters survey.

Tokyo Electric Power Co.'s (TEPCO) tsunami-crippled Fukushima Daiichi nuclear power plant is illuminated for decommissioning operation in the dusk in Okuma town, Fukushima prefecture, Japan, in this aerial view photo taken by Kyodo March 10, 2016, a day before the five-year anniversary of the March 11, 2011 earthquake and tsunami disaster. Mandatory credit REUTERS/Kyodo

The practice risks complicating the biggest overhaul in the history of Japan’s power industry that starts on Friday and is based on outdated concepts for grids in an age of renewable energy and flexible electricity systems, critics say.

Japan has the technological capacity to handle the surge in renewable supplies like solar, which have been added since the Fukushima nuclear disaster in 2011 led to the closure of Japan’s reactors.

Utilities argue renewable supplies are unreliable but experts say their transmission grids can accommodate both nuclear and increases in so-called green energy and both are needed to cut greenhouse emissions.

Nuclear units, along with hydroelectric dams and geothermal generation, has the highest ranking on the grid under what is known as “priority dispatch,” meaning under normal conditions reactors are the last to be shut down when power demand falls as it fluctuates throughout the day.

Hydroelectric accounts for less than 10 percent of Japan’s electricity supply and geothermal almost nothing, while nuclear contributed nearly a third before Fukushima but a tiny proportion now.

Tokyo Electric Power (9501.T), the operator of the wrecked Fukushima Daiichi nuclear plant, for example, is reserving grid capacity for its Fukushima Daini plant nearby. It sits close to the exclusion zone created by the radioactive fallout from the disaster and is widely forecast to be permanently closed.

“It is up to us to decide whether to scrap Fukushima Daini plant,” said Tepco spokesman Kohji Sakakibara.

Capacity is held in reserve for all of the utilities’ power plants, nuclear or otherwise, in case needed in periods of high demand, the companies said.

Utilities also argue that new capacity must be added on grids to accommodate significant new additions to power generation, such as large-scale wind farms and solar parks. But their critics say that lower cost technological innovations will overcome these issues.

“Electric power companies hindering use of existing transmission capacity drives up prices and the cost of power supply,” said Tomas Kaberger, a professor of energy policy at Chalmers University in Sweden and chairman of billionaire Masayoshi Son’s Japan Renewable Institute.

“If economic competition is to happen, this regulated dispatch should be replaced by a bid and ask spot-market solution,” said Kaberger, who is also a former Director General of the Swedish Energy Agency.

The earthquake and tsunami of 2011 ended plans to make nuclear account for 50 percent of electricity supply.

Five years later, only two reactors out of 42 technically operable units are running and, after a court ordered shut down of another operating plant this month, the future has become even cloudier.

(This version of the story makes clear in first paragraph that only two of Japan’s reactors are operating)

Reporting by Aaron Sheldrick and Osamu Tsukimori; Editing by Bill Tarrant

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