ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Business

With its reactors in limbo, Kansai Electric looks to coal

 (placeholder image)
The Nos. 3 and 4 reactors sit idle at Kansai Electric's Oi nuclear power plant, in Oi, Fukui Prefecture.   © Kyodo

TOKYO -- Bowing to the bleak prospects for restarting its nuclear reactors, Kansai Electric Power has decided to go big into coal-fired plants.

     The greater Osaka area's power supplier is planning to secure 1.5 million kilowatts of generation capacity by the end of March 2015, according to a power supply plan released Wednesday. That is roughly equal to the output of one large nuclear reactor.

     The company may enter its own bid to build a facility and also purchase power from other suppliers to curb initial investment and cut costs.

     Kansai Electric says it remains committed to nuclear power despite being in the dark as to when it can bring its idle reactors back online. In the meantime, it has found it necessary to ramp up its thermal power capacity.

     The utility is likely to set the highest acceptable bid at 9 yen (9 cents) or so per kilowatt-hour; the only fuel that can produce electricity that cheaply is coal.

     The cost of acquiring the new capacity is estimated at more than 200 billion yen.

     Kansai Electric plans to hold bidding in fiscal 2014 and to start operating the facility in the early 2020s.

     The utility currently has 30% of its total 35-gigawatt capacity -- in the form of its reactors -- offline. Coal-fired plants make up a puny 5% of the total.

     The cost of coal-based power generation is in the mid 9-yen range per kilowatt-hour, according to a government estimate. Electricity from natural gas is in the higher 10-yen range, and that from oil in the 36-37-yen range.

     A senior utility executive said management wanted to include bidding for thermal power capacity in last year's power supply plan. The idea was nixed out of concern about how the plan would impact the communities around the Oi nuclear power plant, in Fukui Prefecture.

     The Oi plant was online at the time, though there was uncertainty about whether it could continue operating. If the utility had announced a plan to expand its thermal power capacity under such circumstances, Fukui Prefecture could have interpreted the move as Kansai Electric abandoning nuclear power, the executive explained.

     The Oi plant went offline in September; until then, it was Japan's only-operating nuclear plant.

     Most of the country's reactors were halted following the three meltdowns in Fukushima in March 2011.

     Before that, in 2010, atomic energy accounted for more than 40% of Kansai Electric's total power generation mix. Since the devastating earthquake and tsunami, the ratio of thermal power generation has surged from 50% to 80%.

     Compensating for the loss of nuclear power by expanding thermal power generation has trimmed Kansai Electric's annual profit by more than 300 billion yen.

     And without its reactors, the utility has had to depart from its tradition of producing all the electricity it supplies on its own.

     Kansai Electric is not alone; all of Japan's electric utilities are in the dark about the future of their reactors.

     The draft of a new basic energy supply plan, unveiled in February by the administration of Prime Minister Shinzo Abe, calls atomic energy an "important power source." But the draft plan does not propose any specific share of nuclear power in the nation's overall energy mix.

     The plan shows that the administration is tilting toward renewable energy sources to expand production.

     The Cabinet's formal endorsement of the plan, originally expected this month, is now likely to come in April.

     Kansai Electric President Makoto Yagi, meanwhile, has expressed his desire to restart the company's idle reactors as soon as possible.

     But the utility's Oi and Takahama plants have failed to pass new, more-stringent safety checks conducted by the Nuclear Regulation Authority. It is unclear when -- or even whether -- these facilities can come back on stream.

     Other utilities, including Tokyo Electric Power and Chubu Electric Power, are also trying to expand their coal-burning power generation capacity.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media