Saturday, June 21, 2014

Fukushima energy cost for Japan

The 2014 Annual Report on Energy, published by the Ministry of Economy, Trade and Industry (METI), shows that Japan depended on imported fossil fuels for 88% of its electricity in fiscal year 2013, compared with 62% in fiscal 2010, the last full-year before the March 2011 accident at the Fukushima Daiichi plant. With almost its entire nuclear fleet offline, Japan reliance on fossil fuels peaked in fiscal year 2012 at 92.2%.
Japan was self-sufficient for just 6% of its energy demand in fiscal 2012, primarily from hydro and other renewable sources. With two units at the Ohi plant operating for just a few months, nuclear electricity generation met just 0.6% of its energy needs that year. Compared with fiscal 2010, prior to the Fukushima Daiichi accident, Japan was almost 20% energy self-sufficient, with nuclear energy meeting 15% of its total energy needs.
The additional fuel costs that Japan faced in fiscal 2013 to compensate for its nuclear reactors being idled was ¥3.6 trillion ($35.2 billion). Japan reported a trade deficit of ¥11.5 trillion ($112 billion) for the year, largely directly and indirectly due to these additional fuel costs. This compares with trade deficits of ¥6.9 trillion ($68 billion) in 2012 and ¥2.6 trillion ($25 billion) in 2011, following a ¥6.6 trillion ($65 billion) surplus in 2010.
In parallel, Japanese energy consumers have faced increasing electricity tariffs over the past three years. Domestic users have seen a 19.4% increase in tariffs between fiscal 2010 and fiscal 2013, while industrial users have seen their tariffs rise 28.4% over the same period.
Total electricity consumption in Japan decreased 8% between 2010 and 2012, from 996 TWh to 916 TWh. This decrease has mainly resulted from energy conservation measures.

As a results of its increased use of fossil fuels, Japan's carbon dioxide (CO2) emissions have also grown over the past three years. Emissions from electricity generation accounted for 36.2% of the country's total CO2 emissions of 1343 million tonnes in fiscal 2012, up from 33.6% of total emissions of 1307 million tonnes in 2011. In fiscal 2010, electricity generation accounted for just under 30% of Japan's total CO2 emissions of 1256 million tonnes.
An annual report on energy is published annually in Japan to provide an overview of the country's energy situation and to provide the government with guidance on energy policy. The report also provides a summary of measures taken to address the energy supply-demand balance by the government in fiscal 2013.
The policy has been three years in the making, and is Japan's fourth Basic Energy Plan - previous plans were passed in 2003, 2007 and 2010. It is the first to be approved since the Fukushima nuclear accident of 2011 prompted the extended shutdown of the nuclear power plants on which the country had hitherto relied for some 30% of its electricity. A draft of the plan was published by Japan's Ministry of Economy, Trade and Industry (METI) in February.
The latest plan, like its predecessors, recognises the necessity of energy security for the country which is poor in fossil fuel resources. The policy includes commitments to "clean energy" initiatives but places emphasis on ensuring stable and secure energy supplies.
Since its nuclear plants have been off line Japan has seen its fossil fuel imports and greenhouse gas emissions increase. Imports of LNG and thermal coal worth JPY 8.2 trillion ($80 billion) accounted for nearly 10% of total Japanese imports of JPY 81.3 trillion ($793 billion) in 2013.
Setting out policies for the production and supply of nuclear and other energy sources, including clean energy initiatives, the 78-page document designates nuclear energy as an important component of Japan's energy mix and looks to the restart of the country's reactors, while emphasising the priority of safety considerations in the restart and operation of any nuclear plants.
Nuclear power, according to METI, is a quasi-domestic source that gives stable power, operates inexpensively and has a low greenhouse gas profile. However, the ministry noted that nuclear must be developed with safety as a priority and with constant work on preparedness for emergency. Nuclear power is an 'important power source that supports the stability of the energy supply and demand structure' it said.
All of Japan's 48 operational nuclear reactors are currently off line pending clearance from the Nuclear Regulation Authority (NRA) under new regulations that came into force last July. To date, restart applications have been lodged for 17 of those reactors. The first reactors could restart later this year after completion of the NRA's review process.
Preliminary 2013 figures released by Japan's Ministry of Finance reveal a deficit of JPY 11.5 trillion ($112 billion), up 65% on 2012's deficit of 6.9 trillion ($67.5 billion). A major contributing factor has been the cost of the fossil fuels - especially liquefied natural gas (LNG) - that the country has been forced to continue to buy as the nuclear reactors that used to provide some 30% of Japan's electricity prior to the Fukushima accident of 2011 remain offline.
Imports of LNG, at 87.5 million tonnes, were 0.2% up on 2012 figures, but a weak yen meant that the value of the imports, at JPY 7.1 trillion ($69 billion), was 17.5% up on 2012. Imports of coal for use in thermal power stations were also up on 2012 figures. In total, imports of LNG and thermal coal worth JPY 8.2 trillion ($80 billion) accounted for nearly 10% of total Japanese imports of JPY 81.3 trillion ($793 billion) for the year. Total exports of JPY 69.8 trillion ($681 billion), while 9.5% up on 2012, were not sufficient to avoid the overall deficit.
Japan's entire fleet of nuclear reactors currently remains out of service pending restart approvals under a new regulatory regime introduced last year by the country's Nuclear Regulation Authority (NRA). So far 16 reactors have applied for permission to restart, although none has yet completed the NRA's rigorous new approvals procedure.

The three-year rally in liquefied natural gas is cooling as Asia-Pacific supplies jump and demand slows from Japanese utilities preparing to restart nuclear reactors.
LNG shipped to northeast Asia next winter may be sold at the lowest price since 2012 for that time of year, when demand typically peaks, according to a Bloomberg News survey of traders and analysts. Exxon Mobil Corp. and BG Group Plc are bringing new supplies to Asia this year before at least four projects start in 2015, including the first U.S. exports.
Prices have doubled over the past three years since the Fukushima disaster in March 2011, as utilities turned to fossil fuels such as LNG to compensate for the loss of the atomic plants. Japan is preparing to restart at least two of 48 nuclear reactors that were shut in the wake of an earthquake and tsunami that hit the country.
“We have quite a lot of new supply capacity coming on,” Tony Regan, an energy consultant at Tri-Zen International Inc. in Singapore who predicts LNG prices may be at $17 per million British thermal units in the first quarter of 2015, said by phone this month. “There are a number of things that will moderate the upward potential of prices this winter. The regular one is nukes.”
Supplies may cost $18 per million Btu in the first quarter of 2015, the median estimate of 13 traders and analysts in the Bloomberg survey shows. That’s 9 percent lower than a record $19.70 in February, according to data from Energy Intelligence Group in New York. The fuel has averaged $16.18 this year, compared with $16.51 in 2013.
Exxon started sending cargoes to Asia from its $19 billion Papua New Guinea project last month, while BG Group is due to begin exporting from its Queensland Curtis plant in Australia at the end of 2014. Santos Ltd., Chevron Corp. and Houston-based Cheniere Energy Inc. (LNG) are among producers scheduled to start shipping LNG from new operations next year.
Global gas exports are forecast to increase by 18 million metric tons, or 7.5 percent, to 257 million tons in 2015, Energy Aspects Ltd., an industry consultant based in London, said in a report on May 28. The increase would be enough to meet China’s LNG requirements for a year.
Imports to Japan, the biggest buyer of LNG and once Asia’s largest nuclear-power producer, may rise 1.4 percent in 2014 before falling by 1.28 million tons next year as the nuclear plants restart, according to Energy Aspects.
LNG sold into Japan averaged $7.64 per million Btu in 2010, the year before the earthquake and meltdown of Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant, according to estimates from Tri-Zen International. Forecasts in the Bloomberg survey ranged from $16.50 to $19.50 for the 2015 first-quarter high.
Delays to restarts in Japan, which is facing public opposition to atomic power, may boost LNG demand. Two units may resume this year, Cantor Fitzgerald LP said in a June 12 report. This compares with a January forecast for 12 to start.
Japan has been without atomic power since September, when the last of its 48 reactors shut for checks. Utilities including Tokyo Electric, the country’s biggest, have applied for the Nuclear Regulation Authority’s safety review of 19 units, according to the regulator’s website.
“The underlying market tightness will cause average Asia spot prices for 2014 to remain robust,” Andrew Walker, the vice president of global LNG at BG in Reading, U.K., said by e-mail on June 11. The early start of Exxon’s Papua New Guinea project, some buyers holding high inventories and the weather outlook in key markets have caused prices to slip recently, he said.
LNG into northeast Asia has dropped to $11.95 a million Btu in the week ended June 16, the lowest since April 2011, amid “continued weak buying interest and a comfortable supply outlook,” according to the Energy Intelligence Group’s World Gas Intelligence publication. Prices may decline next week on more spot cargoes in the market, four of six traders said in a Bloomberg survey that ended today.
Japan, the world’s third-biggest economy, imported a record 87.49 million tons of LNG last year. The country may reduce consumption of the fuel this year as nuclear production resumes, Yoshihiko Sakanashi, the executive vice president of Electric Power Development, or J-Power, said in an interview on June 1.
The average price of spot LNG cargoes imported by Japan in May was $14.80, down from $16 a month earlier, the Ministry of Economy, Trade and Industry said in a report today.
The restart of the reactors in Japan “will change the mood of the market,” Hiroki Sato, the general manager of Chubu Electric Power Co.’s fuels department in Nagoya, said in a June 12 interview. “Spot prices will be stable at current levels in coming months and rise somewhat, but not to levels close to those of last year during the winter-demand season.”
Asia’s LNG buyers, accounting for about three-quarters of global consumption in 2013, are also considering North American supplies after a surge in extraction from shale deposits.
Cheniere Energy’s Sabine Pass terminal in Louisiana, scheduled to start producing LNG by the end of next year, is the first to win full approval for U.S. exports from the Federal Energy Regulatory Commission since ConocoPhillips’s Alaskan Kenai plant in 1967.
Sempra Energy (SRE) won final U.S. approval yesterday from the FERC to build its Cameron export terminal. The project in Louisiana will start operations in 2018, according to the San Diego-based company’s website.
In addition to LNG from Australia and the U.S., Mozambique and Russia will add to supplies in the global market, Osamu Fujisawa, a Tokyo-based independent energy economist who has worked for Royal Dutch Shell Plc and Saudi Arabian Oil Co., said June 17 by phone. “So there will be a lot of supply, and this will not be good for spot LNG prices.”

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