Wednesday, March 16, 2011

How an earthquake in Japan could impact all of us

In light of the recent issues facing Japan's nuclear power generation industry, I thought I'd take a look at TEPCO, the Tokyo Electric Power Company, the owners of the Fukushima Daiichi Number 1 nuclear power plant that is experiencing severe difficulties.  I'll also look at TEPCO's entire operation and how the loss of one nuclear power plant could impact the world's oil market over the long term.

TEPCO is the world's fourth largest electric power company and has roughly one-third of the electricity market in Japan.  To put TEPCO's size into perspective, in one year, TEPCO sells as much electricity to its customers in Japan as the entire country of Italy uses annually.  TEPCO was founded on May 1, 1951 with 242 small hydroelectric generation facilities and 9 small thermal generating facilities capable of generating 1.79 GW (gigawatts - one GW equals 1000 MW) of power.  It commenced operations of its first major thermal power generating facility in 1953.  It has grown massively over the past 60 years and is now capable of producing nearly 65,000 MW.

TEPCO has had issues with its power plants before.  In 2002, the Japanese government revealed that TECPO had admitted to falsifying technical data submitted to the government over 200 times and that they had concealed plant safety incidents.  TEPCO also admitted that a nuclear unit had nearly reached a critical point in 1978.  In July 2007, a 6.9 magnitude earthquake caused damage at TEPCOs Kashiwazaki-Kariwa plant, the largest nuclear power plant in the world.  Widespread minor damage to the plant took place; as well, radioactive material that was being stored in drums at the site was spilled and a transformer fire took place.  Out of the seven reactors at the plant, four are still out of service and this has had a massive impact on the finances of TEPCO.

TEPCO opened its first nuclear power facility, the now newsworthy Fukushima Daiichi Nuclear Power Station (Number 1 reactor), on March 26th, 1971.  The reactor is capable of producing 460 MW of power (one MW can generally power approximately 1000 homes).  By October 12, 1979 when the Fukushima Daiichi Power Station Unit 4 was brought online, the company's nuclear power generating capability exceeded their capacity for hydroelectric power generation for the first time.  When the Fukushima Daiichi Power Station Unit 6 began operations in October of 1979, the station was capable of producing 4696 MW.  On May15th, 1995, TEPCO's cumulative nuclear power generation output reached one billion MW over the company's history.

Here is a chart showing how TEPCO's power generation capability has grown since its inception 60 years ago:

Here is TEPCO's planned power generation capacity from 2009 for the various each of its energy sources:

Note that TEPCOs current (2009) output capacity is 64,487 MW and that they planned to increase their capacity to 71,296 MW by 2019.  Of the total in 2009, 17,308 MW was from nuclear power which comprised 27 percent of all electricity generated.  This is (or was) expected to rise to 30 percent or 21.453 MW by 2019.

Here is a bar graph showing TEPCO's generation capacity by energy source by year over the company's history:

Here is an interesting graph showing how TEPCO uses various energy sources to meet the demands of its customers for electricity over a given 24 hour period:

Nuclear power forms majority of the base load supply during the entire 24 hour period with small contributions from hydroelectric and coal generation.  Liquified natural gas (LNG) and liquified petroleum gas (LPG) as well as oil provide the energy source used by TEPCO during daily peak demand periods.  

Now, let's step back and take a look at Japan's entire nuclear power generation picture.  Here is a map showing the nuclear power plants located throughout Japan (mostly near coastlines):

Here is a listing of all plants and reactors:

Japan's strategy for undertaking a massive program to develop nuclear power stemmed from the country's nearly complete lack of energy resources (except hydroelectricity).  As shown here, in the year 2000, Japan was dependent on imports for 80 percent of its energy needs, second only to Italy among OECD nations:

Japan was using nuclear power to ensure energy security for its people.  Here's what the Japanese government has to say about its dependence on oil in its Long-Term Energy Program from its Japan Nuclear website:

"Moreover, because, among economically and industrially advanced nations, Japan has the highest rate of primary energy dependence on oil, and an alarmingly high rate of reliance on Middle Eastern oil imports, an important strategy involves the use of alternative energy sources to the extent feasible."

Here is a graphic from the Federation of Electric Power Companies of Japan (FEPC) showing the composition ratio of the fuel used to generate electricity for all electricity generation in Japan for the year 2009 and projections for the following years:

Note that in 2009, 29.3 percent of Japan's electricity was generated by nuclear power plants and that this was projected to rise to 36.7 percent by 2014 and to 41 percent by 2019.  Nuclear was the only fuel source projected to grow.  Oil was the fuel used to generate only 7.1 percent of the nations' power needs in 2009 and this was projected to shrink to 5.3 percent by 2019... at least until now.  Here is a chart showing the massive expansion plans for Japan's nuclear power industry:

From the BP Statistical Review of World Energy 2010, we find that in 2009, Japan imported 4.396 million BOPD or 5.1 percent of the world's total oil daily oil production.  This is down from a peak of 5.598 million BOPD in 1999 and, in looking at Japan's consumption over the past 10 years, it has declined nearly every year.

Now that Japan's nuclear power industry is under the microscope and the country's plans to expand its nuclear fleet is under worldwide scrutiny, an alternative to uranium as a source of energy will most likely have to be found.  As well, in light of the issues facing Japan's nuclear industry, many countries are reviewing their own nuclear plans, Germany and China among them.  If it is true that the world's oil supply and demand is very delicately balanced and that the balance will become even more delicate as peak oil is reached and demand from both China and India rise, increased oil demand from Japan as a replacement for uranium will put additional pressure on oil supplies and upward pressure on prices.  That's why I've found it so surprising that the price of oil has dropped over the past week; nothing has changed except that demand for oil over the long-term has nowhere to go but up.

It's interesting to see how an earthquake in Japan has the potential to impact the entire world, isn't it?


  1. In paragraph 2, you start with 1.79GW and then compare that with "65,000 MW daily".

    (a) the average schmoe cannot convert GW to MW
    (b) "MW daily" shows a lack of understanding of what a watt is. The correct daily value is "5.616 PJ (petajoules) daily" which reminds me I need a nap :)

  2. Yeah, you should just say that it started with 1.79GW and is now at 65GW.

  3. what's a "petajoule". -above average schmoe

  4. BOJ has expaned the QE program to 10T Yen to aid the recovery. However it needs to be signficantly bigger to have a meaningful impact.

    Intrinsic Value

  5. I don't understand how this will put pressure on oil, if Japan and Germany decide to rely less on nuclear, won't most of the slack get taken up by natural gas?

  6. Japan's NHK is already saying that their demand for oil could rise by 300,000 BOPD. As the demand for natural gas rises, prices will follow as well if that's the fuel of choice.

  7. Petajoule is an amount, a total quantity, whereas MW (megawatts) or GW( gigawatts) is a rate.

    The comparision is between a rate capability of 1.79GW then and a rate capability of 65GW now.

  8. Also on Tuesday, the company said a small amount of radioactive material, including cobalt-60 and chromium-51, had been emitted into the atmosphere. Trade ministry officials said the amounts were too small to pose an environmental threat, but that checks were being made at other units at the plant for possible leaks.

  9. I don't understand how this will put pressure on oil, if Japan and Germany decide to rely less on nuclear.

  10. Good information, thank you.
    I'm in Japan, and the talk is about how to change lifestyles to use less energy. It'll be impossible to build new nuke plants now, but I doubt that existing ones will be shut down, unless they're really dangerous. There is talk of gas turbines (TEPCO has already bought a slew of new ones), which would use LPG/LNG I think. Oil and coal are not attractive because they're dirtier. There's news about wind power, but we all know that's not very reliable.
    The country is really proactive about promoting eco-industry, and there's an "Eco-point" system in place already encouraging people to buy efficient products.

  11. Australia is looking into moving to more sustainable energy because of public outcry of the dangers of nuclear energy. The effects of radiation sickness and poisoning can be extremely harmful to all living things. The effects of exposure to radiation include cancer, genetic DNA and reproductive damage, hormonal damage, and thyroid blockage. We are told by the "medical experts" to take potassium iodide and that will keep us safe.

    Radioactive contaminated water is currently leaking into sea from Japan's nuclear reactor plant. This radiation is now showing up in the United States and Canada as irradiated rain water. The levels of radiation in the water is at levels 3,300% of normal safe levels. This can be devastating to say the least to humans, animals and plants! The food we eat and the water we drink is affected if we do not take some steps to keep our food and water clean from radiation poisoning.

  12. Perhaps it is time for significant tax rate breaks to the nuclear power industry, specifically related to research and development. We need more nuclear power generation, not less. Then let's remove all of the legal obstacles to building nuclear power generation plants. Let's streamline the entire process. For at least the last thirty years the goal of public law has been to make nuclear power so expensive and construction so time consuming that no one would try.

    It is time to reverse course. Nuclear power is an excellent source of the massive amounts of energy every country needs to live, to sustain growth, and to prosper. I believe its dangers have been grossly overstated.

  13. It is mid July , so please update your article. Thanks

  14. Iam Stevenb May 11, 2011 05:32 AM

    what kind of idiot are you? The day of the worlds worst nuclear disaster for 25 years and you say the answer is to build more! UTTER UTTER UTTER IDIOT!

  15. oh you wrote your lunacy on May 11 not March 11 - well thats even worse as you had 2 months to think about it - so it confirms you are a moron!