Power Generation Cost Working Group Finally Comes up with New Estimate via Citizens’ Nuclear Information Center

By Matsukubo Hajime(CNIC)

On July 12, the Working Group on Verification of Power Generation Cost (hereafter, WG) of the Advisory Committee for Natural Resources and Energy, an advisory body to the Ministry of Economy, Trade and Industry, announced the outline of a new estimate of power generation cost. CNIC presented information on the costs of nuclear power generation at the 6th meeting of the WG (July 7). Here, I will explain the content of this new cost estimate and its limits.

  1. Outline of the new power generation cost estimate

First, let’s have a look at this new estimated cost of power generation. The cost of generating electricity per kWh is calculated by dividing the total cost of the new installation of a power source in 2030 by the total generated power, assuming it operates for a certain number of years (40 years for nuclear power plants) at a certain facility utilization rate (70% for nuclear power plants).

The most remarkable feature of this estimate is that the cost of generating electricity at nuclear power plants was not shown to be the cheapest for the first time ever in estimates made by Japanese government, including the Ministry of Economy, Trade and Industry (METI).

In estimates drawn up by METI thus far, whenever the cost of generating electricity at nuclear power plants seemed likely to be higher than that of other power sources, tricks such as altering the estimation method were used to make it look as if, on the basis of calculations, nuclear power came out looking cheaper. For example, in a power generation cost estimate carried out in 2011, CO2 countermeasure costs were included on the assumption that emissions trading, which has not yet been fully introduced in Japan, had been introduced. Further, in an estimate put together in 2015, nuclear power plants maintained their status as the cheapest power source due to a change in the calculation method for accident risk response costs and the soaring resource prices at that time. However, in the latest estimate, there has been little option but to accept the reality that nuclear power is no longer a cheap power source.

When power generation costs were estimated based on the WG calculations for 2015, LNG was the cheapest of the four power sources of oil, coal, LNG and nuclear power, followed by nuclear power, coal and oil. In this respect, the latest estimate was largely in line with expectations. In this new estimate, the cheapest power sources are commercial solar power from the low 8-yen level (more than 8 yen but less than 8.5 yen) to the high 11-yen level (more than 11.5 yen but less than 12 yen), followed by gas cogeneration from the high 9-yen level to the high 10-yen level, residential solar power from the high 9-yen level to the low 14-yen level, onshore wind power from the high 9-yen level to the low 17-yen level, medium-scale hydropower at the high 10-yen level, and nuclear power from the high 11-yen level upwards (see Table 1).

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