In this Special Report we analyse the prospects for nuclear power restarts in Japan and the outlook for the country's broader energy mix. As one of the largest consumers of energy raw materials in the world, Japan's demand patterns and energy policy decisions will create ripple effects across the global markets. The rise in LNG prices in Asia is a reflection of higher demand from Japan as it substitutes nuclear power with gas-fired electricity generation. Crude oil and coal imports have also soared, though our power and oil & gas analysis and forecasts suggest that heightened demand for these two fuels will be temporary; merely supporting the energy sector until it recovers from the 2011 supply shock. Natural gas utilisation, however, will become a great deal more entrenched, ensuring Japan remains a long-term customer of some of the world's largest LNG suppliers.
At the moment all of 50 nuclear reactors are offline. This gaping hole in Japan's electricity generation is being filled by thermal sources (oil, natural gas and coal), which has led to soaring electricity prices, which in turn are placing significant cost pressures on Japan's consumers, manufacturers and exporters, and risk undermining the effects of 'Abe-nomics'.
In spite of strong popular opposition, we anticipate the financial burden will prompt two nuclear re-starts in mid-2014, assuming that: a) reactors pass the NRA safety inspections, b) the Fukushima clean-up proceeds without complications that would encourage further public opposition, c) pressurised water reactors (assumed to be safer) are prioritised for re-start over boiling water reactors.
The outlook post-2016 is purely speculative at this point as the 2016 election will be a wildcard for energy/nuclear policy.
However, in terms of our base-case scenario, we are operating under the assumption that two to three reactors will come online per year from 2015 onwards. Not all reactors will restart; we forecast about 40-50% of total capacity...