Japan Gradually Reactivates, Fires Up Nuclear Power Plants

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After a long and arduous battery of routine inspections, not to mention many power failures and blackouts, Japan is ready to resume using nuclear energy after Japanese Prime Minister Yoshihiko Noda last week declared that two reactors were already safe to reactivate and operate after having passed undergoing computerized "stress tests".

This vote of confidence ultimately suggests that demand for nuclear energy, albeit railroaded last year due to the crisis at the Fukushima Daiichi nuclear plant brought by the March earthquake and tsunami, will continue to forge on, and perhaps, could even be here to stay.

Over the weekend, Japanese Prime Minister Yoshihiko Noda declared as safe to reactivate and operate the No.3 and No.4 units at Kansai Electric Power's Ohi plant, in time to avoid a summer power crunch. However, restarting the nuclear power plants need the approval of the local governments which will take time.

The Financial Times, quoting analyst Duncan Hughes, reported the recent development could offer a catalyst for recovery in uranium mining stocks, which had traded at half their previous value.

Japan is not expected to switch on the lights for all its nuclear powers all at the same time. But it is not wont to totally dispose its use of uranium, as nuclear energy accounts for 30 per cent of its country's minimum power requirements.

According to www.seekingalpha.com, in a poll conducted by the Japan Association for Public Opinion Research and published by the Tokyo Shimbun newspaper revealed majority of Japanese people want nuclear power forever shunned off by the country. Of the 3,000 respondents asked if they were in favour of ending the country's dependence on nuclear power, 43.7 per cent replied Japan should gradually reduce its dependence on nuclear power and eventually do away with atomic energy altogether.

But trying to keep up with this emotional sentiment of the populace may do more harm than good for Japan, a country with zero natural resources.

"Moods change with realities. Unless Japan is prepared to downsize their economy and forgo a modern society they have virtually no choice but to move ahead with the restart of their nuclear industry," John Polomny of www.seekingalpha.com wrote.

Currently, Japan has been heavily importing liquefied natural gas ( LNG ) to replace the required fuel needed for its gas generators to produce electricity. But according to Japan's Institute for Energy Economics, LNG can only meet two thirds of the country's energy requirements once all its reactors are shut down. Imports of LNG and crude oil have bloated Japan's trade deficit to record highs.

Moreover, buying and importing those fuels has been driving domestic costs, which could trigger higher electricity bills.

"Ultimately, the Japanese citizen will be most affected by the delay in the restarts in paying higher electricity bills," Tomoko Murakami, nuclear analyst at the Institute of Energy Economics, Japan, said in Bloomberg News.

Read more:

With Idle Nuclear Reactors, Japan Consumes More Oil, More LNG in Fiscal Year Ending March



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Commodities

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