Japan reactor makers consider merging fuel units to counter rivals

As Mr. Ikuo Hatsukade says : « I wish that these three companies could cooperate to produce renewable energies without nuclear energy. »

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A nuclear fuel assembly, center, sits in a spent fuel pool.

TOKYO — Japan’s Hitachi, Toshiba and Mitsubishi Heavy Industries aim to merge their nuclear fuel units to gain an edge on cost in an effort to better compete with Chinese and South Korean rivals.

Amid bleak prospects for getting current domestic reactors up and running, let alone building new ones, the next challenge will be to consolidate their nuclear reactor businesses.

Of the more than 40 reactors in Japan, Kyushu Electric Power‘s Sendai Nuclear Power unit Nos. 1 and 2 in Kagoshima Prefecture and Shikoku Electric Power‘s Ikata Nuclear Power Station unit No. 3 in Ehime Prefecture are the only reactors in operation. Bringing the country’s reactors back online is proceeding very slowly due to strict safety standards set by the Nuclear Regulation Authority.

With the liberalization of Japan’s retail energy market in April, electric power companies are finding it difficult to invest in nuclear power plants, as it is difficult to make forecasts for power generation costs including future decommissioning. The government plans to generate 20-22% of the county’s overall power mix from nuclear power plants by 2030, but many market watchers remain skeptical.

To improve competitiveness, major reactor makers appear to have begun discussing the possibility of integrating their nuclear fuel businesses. One executive of a reactor maker said they cannot hire new nuclear engineers and develop advanced technologies if no measures are taken. “All Japanese reactor makers need to join hands to protect the country’s nuclear technology,” he said.

With the merger of nuclear fuel businesses in sight, the next challenge will be to restore each company’s reactor unit, which have barely remained profitable with only maintenance operations being done. Reactors are classified into two types: pressurized water reactors and boiling water reactors. Some market experts are saying that reactor makers should consolidate operations regardless of reactor type.

Some countries, including Germany, are trying to break away from nuclear power generation, while a number of countries are planning to build new ones. In the U.K., a consortium of Hitachi and General Electric are planning to build nuclear power plants, while Toshiba has plans to construct them on its own. Toshiba’s U.S. nuclear power unit Westinghouse Electric is looking to boost orders in China and India. Mitsubishi Heavy is also looking to expand overseas with new reactors jointly developed with Areva group of France.

That said, Chinese, South Korean and Russian rivals are also actively expanding overseas. To hold a technological lead, Japanese makers must curb costs and build a system to develop technologies.

http://asia.nikkei.com/Business/Companies/Japan-reactor-makers-consider-merging-fuel-units-to-counter-rivals