How much will Fukushima impact the nuclear power industry?
The disaster at the Japanese nuclear plant is already affecting how countries around the world think of nuclear power. Will it affect the price of electricity, too?
There is no doubt that, irrespective of the heroic efforts to regain control of the nuclear reactors at Fukushima, this accident has been a disaster for the nuclear industry. Of course, the combination of a massive earthquake accompanied by an extremely powerful tsunami is mercifully very rare in Japan. Nonetheless, it happened and every possible solution, including dropping water from helicopters as was the case at Chernobyl in 1986, is being tried.
Currently, the impact of this disaster outside Japan is unclear. But Germany has already responded by temporarily shutting down seven of its older nuclear plants. Other governments, including the UK, have indicated that no urgent decisions should be taken about their proposed new nuclear-build programmes. Make no mistake, though, the Fukushima accident has major implications for UK energy policy, even if it is proved eventually that minimal radiation has escaped.
Post Fukushima, it is clear that more gas-fired plant will be built in the EU, thereby raising the price of gas and increasing the dependency on imported gas from countries carrying a high political risk. Whether the UK’s new nuclear-build programme can get underway is now less clear, especially since RWE, part of the Horizon joint venture, is rumoured to be seeking an exit. Furthermore, it is difficult to see how the business strategy of EdF – the UK’s main hope for new nuclear-build - cannot be radically affected by the Fukushima accident.
For the UK, there are three policy options that need implementation. First, the planned closure of some large coal-fired plants should be deferred – irrespective of EU Directives. Secondly, the building of new large gas storage facilities is now paramount. Thirdly, the implicit ruling that no new coal-fired plant can be built without the addition of - so far unproven - Carbon Capture and Sequestration (CCS) technology should be cast aside. But let’s just hope that control is regained of the Fukushima nuclear units.
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