Some of Japan’s idled nuclear capacity may soon come back on line.
Last week, new regulatory requirements for Japanese reactors came into effect. The rules are aimed at ensuring counter-measures for severe disasters like Fukushima.
With the new regulatory regime in place, the Japanese government is now accepting applications to restart reactors. The Institute of Energy Economics, Japan reports there are at least 10 idled plants that power companies “consider are in compliance with the new requirements and for which they are preparing to apply promptly for restart”.
This is a critical development for the global energy market. In the aftermath of Fukushima, operating rates at Japanese nuclear plants are still currently only 5%. Which has meant Japan has been buying oil, coal and LNG to make up for lost nuclear energy.
But if nuclear units come back online, that demand is going to taper off.
As the chart below shows, nothing has changed yet. Oil, LNG and coal imports are still running at the same level as during the past 18 months.
The key issue here is bureaucracy. How long will it take Japanese regulators to approve nuclear re-start applications? And how much opposition will there be from the public, potentially complicating the process?
Generally, Japanese nuclear reviews take around six months. But the country’s Nuclear Regulation Authority has said the review process will be “shortened as much as possible”.
Energy investors keep watching this space. It could have a big effect, fast, on commodity prices.
Here’s to energy in all its forms,
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