Japan Dealing with Power Crisis: Exploring Options for its Lost Nuclear Capacity

The recent nuclear crisis that has hit Japan as a result of the recent earthquake and tsunami will have a major impact on its nuclear as well as oil and gas power sectors. The nuclear crisis was triggered after two of the damaged nuclear reactors caught fire, leaking radiation. As Japan battles to bring these reactors under control, other nuclear power producing countries are seriously considering increasing the safety measures of their nuclear facilities and some of them have already announced reviews of their nuclear programs. As a result of the damages, at least 2 gigawatts (GW) of Japan’s nuclear capacity has been permanently lost, and another 10 GW is likely to remain shut-down for several years. This capacity previously generated 8% of Japan’s total electricity output and would need quick replacement to keep up with the high demand for power in the summer ahead. To fill the void Japan, already the world’s largest LNG (Liquefied Natural Gas) importer is looking to import additional LNG supplies, something that can be facilitated easily through global LNG markets with their flexibility of supply. However, even these additional LNG supplies are only expected to be able to replace about 50% of the lost nuclear capacity in the near-term. Therefore, Japan will have to explore other power generation options to meet the peak demand for power in the approaching summer.

March, 2011

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