A new government analysis projects nuclear power will be the most cost-effective baseload electricity source in Japan by 2040, bolstering the government’s push to restart idled reactors and reduce reliance on expensive fossil fuels, Bloomberg reports.
According to documents released Monday from a trade ministry panel meeting, the levelized cost of electricity (LCOE) for new nuclear plants is estimated at 12.5 yen ($0.08) per kilowatt-hour (kWh) by 2040. This calculation assumes a 40-year lifespan and a 70% operational rate.
This contrasts with a 2021 study which identified LNG-fired power plants as the cheapest option for 2030. The latest analysis, however, incorporates emission reduction costs and reflects higher fuel prices.
While intermittent renewable sources like solar power were initially projected to be cheaper in 2040, the report indicates that when total system costs – including battery storage for grid stabilization – are considered, nuclear power becomes more economical in some scenarios.
The findings come as Japan revises its national energy strategy, aiming to define power mix targets beyond 2030. The government’s renewed emphasis on nuclear power is a direct response to soaring fossil fuel costs.
The analysis also examined the LCOE for emerging technologies such as ammonia and hydrogen co-firing with LNG and coal plants, as well as carbon capture and storage (CCS). Co-firing with hydrogen increased LNG plant costs by approximately 6% for 2040 deployment, while CCS had a negligible impact on pricing.
Japan Spot Power Market Update:
• Nationwide Next-Day Price: Down 0.8% week-on-week to 12.45 yen/kWh on Monday.
• Hokkaido Price Surge: Up 21% week-on-week to 14.54 yen/kWh due to cold weather and increased heating demand.
• Temperature Outlook: A 50% chance of below-normal temperatures in eastern and western Japan between December 14th and January 13th, according to the Japan Meteorological Agency.
• Ohi No. 4 Reactor: Kansai Electric Power Co. announced planned maintenance, taking the reactor offline until mid-February.
• Tokyo Power Futures (EEX): December contract down 1.8% week-on-week; January contract down 3.4%; 1Q 2025 contract down 4.2%; 2Q 2025 contract down 1.9%.
