POWER June 2012 - 54

ResouRce planning
Japan Scrambles to Revamp Its
Electricity Sector
The March 2011 Japanese earthquake and tsunami that destroyed a number of
Japanese power plants-most notably, four nuclear units-hit quickly. Almost
as speedy were calls to take all other nuclear units out of service for safety
reviews. What will take much longer is developing a new, sustainable energy
plan to fill the generation gap left by a potential total lack of nuclear power.
By Sonal Patel
T
he 9.0-magnitude Great Tohoku Earthquake
that struck northeastern Japan on
March 11, 2011, unleashed a tsunami
that killed 20,000 people and triggered a catastrophic
nuclear accident at the Fukushima
Daiichi plant. These events may have rattled
the world's nuclear sector, but in Japan, they
devastated the country's economy, exposed
faults in the resource-poor island's energy
policy, and compromised its energy security.
Geographically isolated Japan has always
lacked natural resources, forcing it to rely on
imported energy: Compared with the U.S.
and China, which produce more than 70% of
their energy needs, Japan must import more
than 95%. In the past, to counter this reliance
on foreign resources, especially since becoming
a signatory of the Kyoto Protocol and
a vocal global proponent for curbing greenhouse
gases, the country had been promoting
an energy policy that strives for simultaneous
achievement of the three Es: energy security,
environment (or climate change mitigation),
and economic efficiency (or lowering costs
for energy).
" However, this is not at all easy. Promotion
of coal is good for energy security and
economic efficiency but will conflict with
the climate change agenda, " explained Jun
Arima, director general for the Japan External
Trade Organization (JETRO), in January.
" Promotion of renewable energy is good for
energy security and climate change mitigation
but tends to be more costly. It is for this
reason that Japan has been promoting the
nuclear option as a key for achieving 3Es. "
Energy economics are exacerbated by
other factors. Though the industrialized,
free-market nation of 127.5 million people
saw average gross domestic product (GDP)
growth of 0.52% since 1980, it is a rapidly
aging society, and its population is forecast to
decline to under 100 million within the next
50 years. Meanwhile, Japan's strong yen hinders
exports, and it has the highest public debt
per capita of any major economy. When the
54
earthquake and tsunami hit, they further ravaged
the country's GDP, demolishing many
factories and interrupting production lines.
Japan is now bracing for an even bigger
impact, stemming from the medium- and
long-term consequences of the quake's effect
on the country's power sector. (See
sidebar for an overview of the industry's
structure.) Like its neighbors, China and
Japan's Power Players
Japan's electricity industry is dominated
by 10 privately owned, vertically
integrated electric power companies
(EPC) that act as regional monopolies,
and which account for about 85% of
the country's generated power (Figure
1). These companies are members of
the Federation of Electric Power Companies
of Japan (FEPC). The balance of
the country's power is generated by inIndia,
Japan-already the world's thirdlargest
producer of nuclear power-had
sought to expand the nuclear component
of its energy mix to reach 41% of total
power supply by 2017, and 53% by 2030.
Plans were in place to construct nine new
reactors by 2020 and another five by 2030.
(For an overview of the country's generating
and recycling facilities, see the web
dustrial facilities. Other significant operators
in the power market are Japan
Atomic Power Co. (JAPC) and the Electric
Power Development Co. (J-Power),
a formerly state-owned enterprise that
was privatized in 2004.
The country's energy policies are managed
by the Agency for Natural Resources
and Environment, part of the Ministry of
Economy, Trade, and Industry.
1. Japan's electric sector. As of March 2011, 10 privately owned power companies
(the bottom 10 listed here), members of the influential Federation of Electric Power Companies
of Japan (FEPC), dominated Japan's power sector. Source: FEPC
Solar
Others
JAPC
J-POWER
Okinawa EPC
Kyusyu EPC
Shikoku EPC
Chugoku EPC
Kansai EPC
Hokuriki EPC
Chubu EPC
TEPCO
Tohoku EPC
Hokkaido EPC
5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
MW
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POWER June 2012

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