The Truth about Fukushima

There is a lot of misinformation around the Fukushima Daiichi reactor explosion. I happened to be in Tokyo the day of the March 2011 earthquake and tsunami. Japan’s continent actually shifted eight metres, meaning geological maps required recalibrating.

Six months prior to the quake, discussions were had about the imminent decommissioning of the then 40-year-old reactor in 12 months’ time. Within those discussions, Tokyo Electric Power (TEPCO), which owned and operated Fukushima Daiichi, debated whether to raise the sea wall or relocate the diesel generators to higher ground to mitigate risks of a scenario that finally eventuated 6 months after the discussion.

At a practical level, TEPCO realized that by the time such a plan to raise the wall or buy new generators to put on higher ground, supply chains and the planning would extend beyond the proposed closure.

When the earthquake hit, the plant operated completely to spec. The reactors went immediately into cold shutdown, the generators fired up to power the cooling pumps. Sadly, the 17-metre wave that struck 45 minutes later was too big for the 15-metre sea wall, knocking out the diesel generators, located underground. The pumps stopped operating and core temperatures in the reactor rose and the Prime Minister was advised by the nuclear agency that reported to him that they needed to vent as the pressure was rising too quickly. Unfortunately, the time taken to enact on the advice was too late and the reactors made the decision for them. The rest is history.

Tohoku Electric’s Onagawa nuclear powerplant, which was located closer to the quake and contended with a higher tsunami wave suffered no damage other than superficial cracks of non-critical infrastructure like fibro walls and glass in facility offices. There was an irony that many of the people who lived in the town of Onagawa fled to the reactor knowing it was the safest place to go.

I was lucky to meet their chief engineer and he gave a very uncustomary rant at the incompetence of TEPCO rendered him to have to put his plant through the ringer when it was a model of exactly how plants should be run Japanese plants spent the better part of a decade to undergo ruthlessly strict audits to ensure another Fukushima would never happen again. The Noto earthquake and tsunami on Jan 1st, 2024 was a litmus test. The Kashiwazaki-kariwa nuclear plant, the world’s largest, suffered no damage, in part due to the strict rules that were put in place.

North Asian views on our energy market

Put simply, our North Asian investors are very concerned at the status of our grid nationally. The recent AEMO updates which highlight a growing risk of blackouts and the prospect of more load-shedding requests.

From their perspective, having nothing has refined their “statecraft” to an art to ensure they can keep the lights on in Seoul and Tokyo. They simply cannot understand how Australia, endowed with coal, gas and uranium reserves can have such a dysfunctional electricity market.

Therein lies the opportunity.

The North Asian supply chains are vast, and they are/will be looking for local partners that have the skillsets to execute on the ground. This is why the Hunter can become a virtuous circle for this investment.

With a hydrogen delegation of Japanese executives due to visit the Hunter in September, this will be a great opportunity to spruik the broader Hunter capabilities as there have been quite a few changes of the guard at Japanese corps operating in Australia.

Energy Markets in Japan

On the 26th June, JERA announced that it has completed a demonstration test co-firing 20% ammonia at its coal-fired Hekinan Thermal Power Plant Unit 4.

Since April, the generator (1GW) saw nitrogen oxide (NOx) on par with coal alone, and sulphur oxides (SOx) reduced 20%. Nitrous oxide (N2O) was below targeted limits.

Commercial operation with 20% ammonia co-firing is expected in Unit 4 from FY2027 and Unit 5 from FY2029. From July 2024, new storage tanks will be added. Currently, there is one tank with a capacity of 1,300 tons but four new tanks of 40,000 tons will be installed from here.

JERA plans to gradually increase the proportion of ammonia to 50% in the early 30s and 100% by the 40s with domestic coal-fired power.

Note the Japanese are confident that 100% firing of ammonia in a coal-fired powerplant is technologically feasible by 2026. In time-honoured fashion, the Japanese will ensure all kinks are accounted for hence the 2040 target.

Energy Markets in Korea

Recently, the Korean Power Exchange (KPX) has launched several auctions for the supply of hydrogen.

There has been a reality bites reaction which is telling of the industry at large.

Instead of the expectation that hydrogen classification by colour (i.e. grey, blue, green) would be segregated, KPX launched the first two auctions for delivery in 2025 as colourless, naturally favouring producers of grey and blue. This was more a response to the lack of availability of green hydrogen at scale.

Subsequently in May 2024, the second round of auctions (1,300GWh p.a. over 20 years) for delivery in 2026 were also colourless. The 3rd round of auctions is expected to be breakdown the auctions by colour for delivery from 2027.The moral of the story here is that commercial green hydrogen still has supply chain hurdles to overcome.

Other items

Biomass in Japan anyone?

This is perhaps one of the more interesting investment opportunities in Japan. Biomass for plants <2MW size attract a \40/kW subsidy for 20 years. One company is looking to raise US$400 million to build 150 of these plants with the opportunity that would cumulatively return around a pre-tax US$1.8 billion by 2030.

Japan has a problem with its forests:

  • 70% of the country’s land mass is covered by forests.
  • The stock of trees is forecast to grow from 5.2 billion m3 to 8.5 billion m3 by 2050
  • These forests no longer act as carbon sinks so need to be regenerated.
  • Of the 25 million hectares of forest, 10 million of that is man made.
  • Wood from such forests is called “unused wood” and attracts the\40/kW subsidy.

The generous subsidies are designed to help managed forests that are getting out of control.

There could be potential opportunities for relevant Hunter companies to provide equipment to these plants. Please reach out to michael@hunternet.co.au for more details.

Bio Char

The biochar discussion in Japan and Korea is growing as an alternative fuel source to coking coal in the manufacture of green steel.

Biomass produces biochar and the possibilities are in scale.

There is an indigenous owned NSW company that has competencies in plasma that is making some solid inroads in the efficient production of SAF, with biochar the byproduct.

 

Regards,

Mike Newman

Chief Representative – North Asia