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Message: After nearly 2-years hiatus, nuclear is again supplying electricity in Japan
Japan returned to nuclear energy generation when Unit 1 of the Sendai power plant resumed commercial operation last Thursday. Fuel loading was completed on July 10th, followed by a month of safety testing. The reactor was restarted on August 11th and reached full capacity on August 31st. After clearing final regulatory inspections on September 10th, the unit began delivering electricity to the national grid later the same day.
Loading of fuel rods into Unit 2 of the Sendai power plant started on September 11th and was completed on September 13th. Assuming a similar 2-month time-line to commercial operation, electricity should start flowing to the national power grid from the second reactor in mid-November.
In August, Japan's Nuclear Regulation Authority also approved a 10-year license extension for Sendai 1. The reactor had reached 30 years of commercial operation in July 2015 and required an application and extensive review for permission to operate for an additional 10 years in accordance with Japanese law.
According to the Japan Atomic Industrial Forum, increased reliance on fossil fuels due to the idling of all of Japan's nuclear power plants post Fukushima, has raised household electricity rates by ~20% and industrial rates by ~30%. In 2014 alone, Japanese utilities spent about $30 billion on oil, coal and natural gas imports to compensate for the lack of nuclear electricity generation. Japan's Minister of Trade and Economy has spoken to the importance of returning to nuclear power for the country's energy security, economic recovery and to mitigate global warming.
Despite the turmoil in world and commodity markets in the last couple of weeks, the uranium price has been strengthening steadily (Figure 1), which is consistent with major demand coming from China's unprecedented reactor build, India setting up a strategic uranium reserve and Russia's push to be the leading supplier of nuclear technology and currently building 1/3rd of all new reactors globally.
Figure 1 - Uranium Spot Price (US$)
Sources: WNN, NEI, WNA, Dundee Capital Markets, The Guardian
Sept. 10, 2015 - Sendai N - reactor switches to commercial operation
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