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Economy

Japan's energy policy takes a hit with another reactor shutdown

TOKYO -- Shikoku Electric Power's decision Friday to decommission an aging nuclear reactor casts further doubt on the government's goal of retaining nuclear energy as a significant power source.

     The decision to retire the No. 1 reactor at the Ikata power plant in Ehime Prefecture means 12 of the 54 nuclear reactors that were operating prior to the Fukushima nuclear disaster in March 2011 will never come back online. The current government's energy policy expects nuclear to account for 20-22% of total power output in Japan in fiscal 2030.

     Around 30 working reactors will be needed to achieve this goal. But only two -- the Nos. 1 and 2 reactors at Kyushu Electric Power's Sendai plant in Kagoshima Prefecture -- are currently in operation.

High hurdles

"The biggest factor in our decision was business feasibility," Shikoku Electric President Hayato Saeki said Friday.

     High costs to upgrade facilities for new, tougher nuclear safety regulations also have been a major reason in other utilities' decisions to scrap old reactors. Bringing reactors built in 1970 or earlier back online requires considerable upgrades. For example, power cables in and out of reactors, which stretch to several hundred kilometers per reactor in total, need to be switched to fire-retardant varieties.

     For the reactor at Ikata -- which dates to 1977 -- the cost to switch power cables and make other required upgrades is estimated at 200 billion yen ($1.77 billion), far exceeding the projected decommissioning costs of around 40 billion yen.

Government stays committed

Given the full deregulation of Japan's retail power market April 1, companies may focus on lower-cost options such as building new coal-fired power plants rather than spending billions to revive nuclear power against the wishes of many Japanese citizens.

     But the government intends to demand that major utilities work toward achieving the fiscal 2030 power-mix goal. To lift the proportion of nuclear power closer to the 20-22% target, building new reactors at the site of those being decommissioned may be presented as an option.

Impact on host community

Shikoku Electric's decision also deals a blow to the city of Ikata. The utility employs 350 people at the plant, which also has two other reactors. In addition, 1,700 people, mostly local residents, work in jobs related to the plant.

     "If the number of reactors falls to two, it will impact on jobs," Mayor Kazuhiko Yamashita said Friday.

     Decommissioning of the No. 1 reactor also may hurt the city's finances via a drop in central government subsidies for communities hosting nuclear power plants.

     Ikata's population shrank by 11.5% over the five years through Oct. 1, census data shows. Job losses tied to the nuclear plant were cited as the major reason for the population decline.

(Nikkei)

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