Last week the Japanese Noda government decided to restart two nuclear reactors at the Ohi nuclear plant in Fukui Prefecture, central Japan. It will be the first nuclear power plant to resume operation since all of Japan’s 50 nuclear reactors were shut down after the disaster at the Fukushima Daiichi plant
The unpopular Japanese government approved the restart of two 1.18 GW reactors at the Ohi plant operated by Kansai Electric Power Company. Apparently, the plants will restart in July. The prospects for additional restarts at other plants are unclear, but many plants have passed similar safety hurdles to the Ohi reactors. The fact that a new precedent is established could cause other facilities to look towards quicker restarts, but most reports point to further restarts this winter, at the earliest. Even if earlier than expectations, additional nuclear start-ups would be almost too late to have any impact upon peak seasonal demand in Julyand August.
Because the Kansai area is highly nuclear dependent, and restarts were necessary to avoid serious power shortages this summer, our analysts had assumed in their forecasts that the two Ohi plants would resume operations. The effective impact must be kept in perspective. If the Ohi plants were to displace oil on a one-for-one basis, the restarts would reduce oil use by about 80 kbd. However, this is unlikely, as despite the restart, oil plants will still need to run at high utilization to avoid power shortages. It is therefore estimated that this will likely reduce oil use in power plants by about 25 kbd (versus no restarts) and oil use is still expected to average 750 kbd over July and August.
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The restart of these Ohi nuclear reactors 3 and 4 will add 2.36GW once the plants have ramped up to full capacity, helping to relieve tight generation margins in the peak summer demand months and reducing fossil fuel consumption overall. This comes as spot LNG prices were reported lower at roughly $17/mmbtu. No further restarts have been suggested although NISA has approved first stage stress test results at Ikata Unit 3 (0.9GW), while Genkai Units 2 and 3 (1.7GW) completed maintenance in July 2011. A revision of the country’s Strategic Energy Plan has yet to be formally discussed.