Episode 2 – Market report S1 2021
Coronavirus
Unsurprisingly, the Japanese economy is still reeling from the crisis due to the coronavirus pandemic, particularly because of the crisis’ impact on its usual driving forces, namely consumption and exportations. In 2020, the GDP was down 4.8 % compared with the previous year, making it the 2nd biggest drop after 2009 since data started being recorded in 1955. The Japanese yen is losing value compared to the euro, with the trend clearly reversed since the implementation of sanitary protocols in spring 2020. The exchange rate, previously of about 120 JPY for 1 EUR, is now about 130 to 1 at the end of Q1 2021.
Of all the mitigation measures enforced in Japan to curb the spread of the virus, the immigration policies are undoubtedly the most restrictive. Despite a short period in late 2020 until early January 2021 where visas could once more be issued to foreigners travelling to Japan, it is now virtually impossible to set foot in the country. Travel is only permitted for Japanese nationals and residents, and is thoroughly regulated.
Japan experienced three viral surges (“waves”) but remained in control throughout and as a result, the human cost of lives cannot be compared to the numbers seen in Europe. The (overall) death rate in Japan for 2020 was the lowest in 11 years. Japanese policymakers reject the idea of “learning to live with the virus” and aim for zero new contaminations, while also enforcing relatively mild sanitary measures (no “hard” lockdown, for example). A fourth wave started in March: it is still underway and handled in a manner similar to the previous three. A lot of criticism has been expressed regarding the vaccination program, however. In early spring, only 1 % of the population had been vaccinated, which ranks Japan very far behind other industrialized countries.
Fukushima Daiichi NPP
At the end of February, TEPCO announced it had completed the retrieval of the fuel rods from Fukushima Daiichi’s 3rd unit’s pool, bringing this particular operation to a close in slightly less than two years. This is an important milestone, which necessitated complex preliminary works on site, such as the erection of a ventilated containment zone atop the reactor’s structure, which had been damaged by the hydrogen explosion during the accident.
Production of the “Boom” robot delayed. This robot, developed by Kurion in partnership with Japanese companies, including MHI, is currently in production in the United Kingdom by Veolia Nuclear Solutions. However, the current sanitary measures have delayed operations. The project has been modified in order to move the inactive tests to Japan and carry them out there, with the hope that the resulting delay on the project would be limited to one year. This robotic arm is equipped with seven joints and, unfolded, is 21 meters long. It is planned to be deployed through a horizontal access port inside Fukushima Daiichi’s 2nd unit to, among other missions, retrieve fuel debris samples. The start of operations is now expected in late 2022.
On February 13th, 2021, the Fukushima prefecture was shaken by a powerful earthquake of magnitude 7.1, possibly an aftershock of the March 2011 event. TEPCO reported that the power plant was largely undamaged. However, a drop in the water level maintained at all times to ensure cooling of the damaged reactors has been detected on Units #1 and 3. This loss of water within the containment is currently compensated by increasing the incoming flow rate. Investigations are still under way but TEPCO seems to think that the likeliest explanation would be a widening of the existing leaks.
10 years after the accident, the dismantling of the Fukushima Daiichi NPP has made tremendous and visible progress. However, the delayed implementation of the small-scale fuel debris retrieval system (the British robotic arm) is bad news for TEPCO. This project is, in a way, on the critical path for dismantling the reactors: the lack of concrete knowledge on the properties of the fuel debris is indeed a problem for many studies or technological decisions. TEPCO hopes that the analysis of the samples retrieved by this remote-controlled arm will enable the company to further detail the decommissioning and dismantling scenario after 2025. Moreover, the consequences of this new earthquake act as a reminder that, however complex it may be, the dismantling of the Fukushima NPP must be swift. The reactors’ structures and in particular their PCVs (Primary Containment Vessel, the containment structure for BWRs) are damaged, which makes it difficult to ensure the absence of environmental contamination should a major event occur.
Restarting the nuclear fleet
Mid-March, several events impacted the restart of the Japanese nuclear fleet.
The Ikata 3 reactor, shut down since December 2019 for scheduled maintenance, finally received the authorization to restart from the Hiroshima prefecture. Legal proceedings had been opposing local residents and the operator, Shikoku EPCO, regarding safety concerns due to the seismic and volcanic activity in the area.
On the same day, the municipality of Mito suspended the restart of the Tokai 2 reactor. This is also a consequence of legal proceedings due to concerns from local residents of the Ibaraki and neighboring prefectures. In this case, the heart of the matter is the area covered by the evacuation plan prepared by the operator of the plant, JAPC.
Kashiwazaki-Kariwa 7’s restart has also been suspended. This decision comes from Japan’s Nuclear Regulation Authority (NRA) following a series of security breaches earlier this year. The site, operated by TEPCO, relied for almost a month on a damaged security system, making it impossible to prevent intrusions efficiently.
10 years after the catastrophe, restarting the Japanese nuclear fleet remains a difficult challenge. On top of the technical and economic considerations regarding the use of implementing safety modifications in order for the reactors to restart, the population is also quite strongly opposed to it. Even when the NRA approves the restart of a nuclear power plant, the final decision actually lies with the legal authorities of the relevant localities, which also starts proceedings depending on the general public’s complaints.
France and Japan
M. Philippe Setton, French ambassador to Japan since September 30th, 2020, visited the Fukushima Daiichi NPP on March 29th, 2021. There, he had the opportunity to talk with TEPCO representatives. This visit was actually part of a tour of the Fukushima and Miyagi prefectures as a display of France’s solidarity with Japan after the Great East Japan Earthquake.
In February, Framatome announced the creation of a Japanese subsidiary, Framatome Japan, in order to help restarting the nuclear fleet and reaching the national 2050 targets for carbon-free energy.