CNIC Statement: Shikoku Electric should seek a new direction by becoming a pioneer in nuclear plant decommissioning
Citizens’ Nuclear Information Center Statement, February 4, 2020
The Hiroshima High Court has issued a provisional injunction ordering Shikoku Electric Power Co. (SEPCO) to suspend operation of the Unit 3 nuclear reactor at its Ikata Nuclear Power Station in Ehime Prefecture. Presiding Judge Kazutake Mori handed down this decision on January 17, 2020.
Referring to the active fault situated very close to the plant’s premises, the ruling said it is undeniable that the median tectonic line that constitutes the stratum boundary is a strike-slip fault which contains geological components of a normal fault. Moreover, it said that the utility should take into consideration the risk of a massive-scale eruption, if not a catastrophic one, of Mt. Aso, located about 130 kilometers away. The court’s estimate of the volcanic eruption volume of Mt. Aso is three to five times greater than the utility’s estimate, and the Nuclear Regulation Authority (NRA)’s decision that the Ikata plant met its new regulatory standards was based on the utility’s over optimistic estimate. The court, therefore, concluded that NRA’s decision was unreasonable.
In response to this ruling, SEPCO declared that it would immediately take procedures for appealing this case to a higher court. The company, decided to postpone this action for a while due to serious troubles that occurred one after another in Ikata Unit 3 in January, but the appeal was lodged on February 13.
On January 30, SEPCO President Nagai Keisuke said in a press conference that his company had no intention of endlessly postponing or delaying the legal action. We would like to suggest that this is a good opportunity for the utility to seek a new path by becoming a pioneer of nuclear plant decommissioning.
High power generation cost of Ikata Unit 3
Figure 1 shows the trend of unit cost of SEPCO’s nuclear power generation that can be estimated from its annual securities reports issued since FY2005. The unit cost was calculated by dividing the utility’s total nuclear power generation cost recorded in the operating expense statement of its electric power business by the total nuclear power output recorded in its annual securities report. Shikoku Electric’s annual nuclear power generation cost stood at around 90 billion yen before the 2011 nuclear accident at the Fukushima Daiichi Nuclear Power Station, when the utility operated three nuclear reactors at its Ikata nuclear plant. Its nuclear power output at that time totaled around 15 billion kWh. Thus, dividing the 90 billion yen generation cost by 15 billion kWh means that the average unit cost of the utility’s nuclear power generation was approximately 6 yen/kWh.
Figure 1: Trend of unit cost of Shikoku Electric’s nuclear power generation and total nuclear power generation cost
Meanwhile the annual nuclear power generation cost after the Ikata plant resumed operation of Unit 3 in 2016 was around 75 billion yen, not very much lower than the level of the pre-accident period. The total power output, however, plunged to 3.1 billion kWh.
Dividing the 75 billion yen cost by 3.1 billion kWh gives around 19 yen/kWh, which is the average unit cost for nuclear power generation during the past three years. The total power generation cost did not drop so sharply when the reactor was offline, while the nuclear power output plunged because Ikata Units 1 and 2 (with an output of 566 MW each) were decommissioned, making an increase in output very unlikely.
The next thing we should do is to estimate the future unit cost of power generation of Unit 3. The rated power output of Unit 3 is 890 MW.
This means that even if the reactor’s capacity factor reaches 100%, its annual power output will total about 7.8 billion kWh. When the total nuclear power generation cost is around 75 billion yen, the unit cost will be about 10 yen/kWh. The average capacity factor of all power generation facilities at the Ikata plant during the pre-accident period stood at 81%, and calculating by using this percentage shows that the plant’s annual power output was around 6.3 billion kWh. This means that the unit cost of power generation of the plant was higher, around 12 yen/kWh. (In the case of FY2019, the plant’s capacity factor was 73％, and the unit cost of power generation was 13.5 yen/kWh)
The Ikata plant has experienced various troubles that have pushed down its capacity factor. For example, a shutdown ordered by a temporary court injunction, and downtime caused by construction of special safety-related facilities on the premises. As soon as the plant begins using the special safety-related facilities, it will have to begin repayment of the construction costs. Given this situation, the 12 yen/kWh unit cost may be too optimistic an estimate.
As for SEPCO’s thermal power generation, the unit cost hovers around 5 yen/kWh. According to the Japan Electric Power Exchange, the 2018 average system price was 9.76 yen/kWh. This is the contract price when a sales contract is concluded based on the demand-and-supply curve drawn by combining all bid prices across the nation. In the Green Investment Promotion Organization’s feed-in tariff (FIT) bidding of electricity generated by large-scale solar power producers of more than 500kW, the average contract price in the latter half of FY2019 was 12.57 yen/kWh. The contract price for solar power is likely to decline further because the introduction cost of solar power generation is declining at present.
SEPCO has enough electricity generating capacity without operating the nuclear reactor
As far as SEPCO is concerned, there is hardly any need to worry about a power supply shortage. We have checked the utility’s electric power supply/demand situation for the April-December period of FY2019. The result showed that the utility supplied power to areas other than its own transmission grid area in almost all time zones using the interconnected power line system. Although the utility also received electricity from other electric power companies, the amount was very small. Even on August 2, 2019 when the greatest-ever power demand occurred in Japan during the 14:00 to 15:00 period, SEPCO transmitted electricity greater than its nuclear power output to other areas. (cf. Figure 2)
Figure 2: SEPCO’s power supply/demand situation on August 2, 2019, when Japan’s total electricity demand hit a record high
Figure 3: Shikoku’s surplus electricity generation (total generation minus nuclear generation minus area demand) from 4/1/2019 to 12/31/2019.
Figure 3 shows SEPCO’s surplus electricity generation. The figure indicates that the utility had surplus electricity in more than 90% of all time zones during the day. Although a greater amount of thermal power generation may be necessary occasionally before wind-power and solar-power generation expands further, rechargeable batteries are introduced more widely, and strengthened energy-saving measures produce more favorable results, this would still be cheaper than restarting the nuclear reactor.
Concerns over the safety of Ikata nuclear plant
SEPCO should decommission Ikata Unit 3, not only for economic reasons but also for safety reasons. The safety reasons are not limited to those involving the nearby active fault and the Mt. Aso volcano that were pointed out by the Hiroshima High Court.
Previously, there were three nuclear reactors at the Ikata plant. Since the three-reactor operation system was launched in 1996, regular inspections of the reactors were conducted for a cumulative total of more than 190 days annually. Each one of the reactors was inspected in turn during that period. Units 1 and 2 were, however, later decommissioned and Unit 3 became the utility’s last remaining nuclear reactor. It is also unlikely that SEPCO will construct a new reactor in the future. According to its current standard operation schedule, each regular inspection requires three to four months and is carried out once every 13 months. This indicates that the length of its annual inspection period has been halved. As the move to decommission nuclear reactors progresses in Japan, the number of workers skilled in regular reactor inspection work is likely to decline. These workers are expected to attach greater importance to their contracts with other utilities that have more than one nuclear plant. If this happens, SEPCO will probably face difficulties in securing skilled workers capable of conducting regular inspections of its nuclear reactor. This may harm safety at its nuclear plant.
Under these circumstances, there is no reason why SEPCO should maintain Ikata Unit 3. Our perception is that the utility should decommission Unit 3 promptly from the viewpoint of not only economic concerns but also safety concerns, and that the utility should move forward by becoming a pioneer in nuclear plant decommissioning.