The disaster at the Fukushima No. 1 Nuclear Power Plant is expected to boost the cost of nuclear energy to levels on par with those for energy produced by thermal power plants, a development that is likely to prompt the government to seek a fine balance between costs, stable supply and environmental factors in formulating the country’s new energy policy.
The government’s cost-examining panel unveiled its preliminary calculations of energy costs on Dec. 6. It estimated the cost of the nuclear disaster at the Fukushima nuclear plant at 0.5 yen per kilowatt-hour. If government subsidies for municipalities hosting nuclear power plants and related facilities are included, the cost of nuclear energy, which had heretofore been deemed the lowest, is likely to be about the same as that of energy produced by thermal power plants.
The cost-examining panel started to review energy costs in October. It is to meet on Dec. 13 again to unveil the cost of generating various types of energy over the next 30 years, factoring in fluctuations in fuel costs over time.
In addition to the cost of the disaster at the Fukushima nuclear power plant, government funds covering subsidies for municipalities that host nuclear power plants and related facilities will exceed 1 yen per kilowatt-hour, and construction costs and additional costs for safety measures will further boost the total cost of nuclear energy. If cost of covering measures taken in response to the Fukushima nuclear crisis were to become greater than originally anticipated, the cost of nuclear energy will increase further accordingly. The cost of generating nuclear energy is estimated at 5 to 6 yen per kilowatt-hour at present, but it is likely to rise to about 10 yen, a government source says.
The cost-examining panel, meanwhile, expects the prices of oil and coal to rise in line with increasing energy consumption in emerging economies. The panel intends to take into account costs of reducing green house gas emissions. Therefore, the cost of energy produced by thermal power plants using coal or liquefied natural gas (LNG) could rise to about 10 yen per kilowatt-hour, while energy produced by oil-fired power plants could nearly double the current cost, which is between 14 and 17 yen per kilowatt-hour.
The costs of renewable energy — 37 to 46 yen per kilowatt-hour for solar power and 11 to 26 yen for wind power — are expected to be reduced through technological development and mass production, but they will still be higher than those of energy produced by nuclear power plants and thermal power plants.
Nuclear insurance group won’t renew Fukushima plant’s liability insurance
The Japan Atomic Energy Insurance Pool has decided not to renew the Fukushima No. 1 Nuclear Power Plant’s insurance contract when it expires in January next year, it has been learned.
The pool, a group formed by 23 nonlife insurance companies to provide nuclear power plant-related liability insurance, judged that the risks from the plant are still high, even though the nuclear disaster triggered by the March 11 earthquake and tsunami is gradually being brought under control.
If the nuclear plant, which is operated by Tokyo Electric Power Co. (TEPCO), is left uninsured, then work to bring the crisis under control and decommission the plant’s crippled reactors could be adversely affected. TEPCO and the Ministry of Education, Culture, Sports, Science and Technology, which oversees compensation, are now considering alternative measures such as setting aside an amount of money to match the amount of insurance.
Under the Atomic Energy Damage Compensation Law, nuclear power plant operators are required to take out two types of insurance. One is the government’s nuclear power damage compensation insurance, which covers damage caused by disasters such as earthquakes and tsunamis. Under this coverage, TEPCO has received 120 billion yen. The other is the Japan Atomic Energy Insurance Pool’s liability insurance, under which private insurers cover general accidents and operating errors.
Liability insurance contracts last for one year, and the Fukushima No. 1 plant’s contract expires on Jan. 15. Since the risks associated with the plant are high, a pool from countries with nuclear power plants had been used to form reinsurance contracts, in which insurance is purchased by other insurance companies to disperse the risk.
However, the risks involved in the handling of the nuclear disaster and the work to decommission reactors is on a different level from those at ordinary nuclear power plants. In July foreign reinsurance companies told the Japan Atomic Energy Insurance Pool that it would be difficult for them to take on a renewed contract, and the pool explained this situation to the Science Ministry.
The Atomic Energy Damage Compensation Law forbids the operation of uninsured reactors and other related activities. Since the ministry judged that removing fuel rods would fall under the classification of “operation and other related activities,” thereby hindering its handling of the accident, it began discussing countermeasures with TEPCO.
TEPCO says that it is still in negotiations to renew its insurance contract, but there are no prospects of it being extended. The compensation law states that 120 billion yen can be set aside in the form of cash and marketable securities at the Legal Affairs Bureau in place of the insurance, and officials are considering using this method. However, due to compensation claims and increased use of fuel at thermal power plants, TEPCO is short of funds, and it remains uncertain whether the full amount could be secured.
Mainichi Shimbun, November 28, 2011
http://mdn.mainichi.jp/mdnnews/national/archive/news/2011/11/28/20111128p2a00m0na020000c.html