Japan sees potential power shortage next summer

TOKYO, (Reuters) - Japan could face a power shortage of more than 9 percent next summer if all its nuclear reactors are shut, media reported on Wednesday.

 Public concerns about nuclear power flared after a deadly earthquake and tsunami in March caused the world’s worst nuclear disaster in 25 years. By May 2012, all 54 of Japan’s reactors could go off line if safety fears delay their restart after regular maintenance.

 The government warns that would increase pollution and costs for the recovering economy, though it is discussing ways to reduce reliance on nuclear power and Prime Minister Naoto Kan sees Japan’s future as a nuclear-free nation.

 If Japan had to operate without any nuclear reactors it would only be able to supply 162,970 megawatts of power next summer, 9.2 percent short of estimated 179,540 megawatt demand, according to government estimates presented to a ruling party meeting, Japan’s daily Asahi reported.

 A government official said a team was working out the estimates and that the final forecast could be different as they were taking into account constantly changing factors.

 The simulation does not take into account the effect of power savings, which so far have spared Japan electricity shortages this summer, when demand peaks because of the widespread use of air conditioning.

 “The mostly likely scenario is power companies turning to thermal plants to boost output, either by reactivating old ones or building new plants. There is still plenty of time for them to prepare for next summer,” said Koya Miyamae, an economist at SMBC Nikko Securities.

 Only 16 nuclear reactors are now operating in the wake of the natural disasters and the share of nuclear power in the nation’s energy supply fell to about 18 percent in June from about 30 percent before March 11.

 However, a combination of mandatory power cuts and voluntary savings by companies and consumers allowed the utilities to match supply and demand without resorting to rolling blackouts.

 Some industries have opted to operate on the weekends to avoid peak hours and sales of electric fans have been brisk this summer as many households have reduced usage of air conditioners to save electricity.

 Utilities are also expected to make various efforts to overcome any gaps between supply and demand.

 Relying more on thermal power plants could mean higher fuel costs for the utilities as more oil and natural gas will be needed, but that may not be simply passed on to consumers, Miyamae said.

 “Raising electricity bills require clearance from the trade ministry and such permission may not come right away. In such a case the utilities would have to shoulder any cost increased,” he said.

 Nikko Securities has estimated next summer’s power shortage at over 6 percent and required electricity savings at about 16 percent, slightly above 15 percent cuts requested from big customers of power utilities in the most vulnerable areas.

 The Ministry of Economy, Trade and Industry has estimated that power generation costs would rise by over 3 trillion yen  ($38 billion) per year, an equivalent of about 0.7 percent of gross domestic product, if utilities replaced nuclear energy with thermal power generation.

 Estimates of the negative impact on growth vary widely from a 0.2 percent loss in output to a 2.5 percent drag.

 Tokyo had been lobbying local governments to allow restarts of reactors shut down for regular inspections but its announcement of “stress tests” raised the prospect that the restarts could be delayed for many months.

 The simulations, loosely modelled on safety assessments by the European Union, will examine how well plants could hold up to earthquakes and tsunamis. There is no set timetable, but Japan’s nuclear safety agency has said it expected reports from the final stage of the tests covering all of the nation’s reactors by the end of the year.