Fesharaki Says Power Sector Is Key To Japan’s Future Energy Mix

The power sector is key to the future of the Japanese energy mix, according to FACTS Global Energy (FGE) Chairman Fereidun Fesharaki. In a 30 April Chairman’s Corner report he argues that the nuclear plants at Fukushima will not come back on line after last year’s disaster, and that no new nuclear projects will be started. Japan’s preferred fuel will be LNG, and a new Ministry of Economy, Trade and Industry (METI) policy due to be announced this summer will encourage LNG use. He adds that Japan will seek to limit oil use for power generation to pre-Fukushima levels, although it may take until 2020 for total oil use in power generation to fall back to this target. Dr Fesharaki estimates that the Fukushima crisis will increase Japan’s LNG import needs by over one-third, from 70mn tons/year in 2010 to over 100mn t/y by 2030.

“The longer term structure of the power industry will see all but 6.7gw of nuclear capacity retire by 2040,” says Dr Fesharaki. “By 2020, available capacity is 32.4gw and 21.3gw by 2030. What can replace nuclear is LNG or renewables. For those who wish to export LNG to Japan, this provides a framework of the minimum LNG import requirements for 20-year contracts, say for 2018-38. The LNG import requirements will rise to around 90mn t/y by 2020 and around 100mn t/y by 2030-40. By 2038, Japan’s LNG import requirements will rise to 105-110mn t/y, assuming a substantial increase in renewable energy of some 400-500% besides hydro. If the growth in renewable energy does not happen as expected, it means more LNG. But, by that time the reliance on LNG would have risen to well over 40%. Indeed, we consider this number to be above the threshold acceptable by Japan as the energy security dependency factor on LNG. As such, we see 100mn t/y as a reasonable ceiling for Japan’s LNG imports.”

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