Japan disaster casts doubts on nuclear power resurgence

Long-term impact of Fukushima crisis still unclear, but in the short-term, countries will undertake nuclear safety reviews and favor alternative energies, among others, says analyst.

Explosions at three reactors in Japan's Fukushima Daiichi nuclear complex have put a question mark on the future of nuclear power and the nuclear industry, as well as stoked anxiety among investors and countries that were planning for nuclear power, a new report states.

In a statement released Tuesday, Ravi Krishnaswamy, Frost & Sullivan's Asia-Pacific vice president of energy and power systems practice, pointed out that it is still unclear whether a meltdown did take place amid the explosions, which were brought about by a massive earthquake last Friday in northeastern Japan that also unleashed a tsunami. The resulting potential impact on health, environment and the future of the industry, are also not yet certain, he said.

According to Krishnaswamy, Japan's nuclear power sector has long held an "impeccable safety record for several decades" and often cited as a role model to follow. The analyst noted that the Japanese government has been assuring the public and international community that the health danger from the release of radioactive steam from the blasts is quite low, and at the time of writing, the containment wall for the nuclear plant appeared to be intact.

Over the last few years, there has been a "nuclear renaissance of sorts" amid fears of global warming and desperation for clean base load capacity, said Krishnaswamy. Countries in regions around the world--from the Middle East to North America, Europe, South and Southeast Asia--have developed plans for new or additional nuclear power capacities, the analyst noted.

As of 2010, there are 56 nuclear reactors being constructed worldwide, with the Asia-Pacific region accounting for more than half of these, he added.

With this in mind, the current nuclear reactor crisis is expected to have wider ramifications on the overall clean energy industry worldwide, Krishnaswamy pointed out. While he acknowledged that the long-term impacts cannot be ascertained for now, he painted a number of short-term impacts on the nuclear industry.

For a start, all nuclear power plants currently in operation, whether or not they are located in earthquake-prone zones, are likely to undergo a more comprehensive review of plant safety processes, said Krishnaswamy. More risk scenarios are also likely to be factored in, and the International Atomic Energy Agency (IAEA) will also play a larger role in such reviews, he added.

The analyst also observed that if the Japan's reactor crisis adversely affects the global public perception, there will be immediate responses from some countries, for instance, in terms of reviewing nuclear power policies. Germany, for one, has already announced a three-month suspension of its plan to extend the lifespan of its nuclear power plants, Krishnaswamy said.

Public perception, he elaborated, is likely to suffer at least in the short term. Krishnaswamy said this would mean that governments worldwide will likely have their "public relations machinery [working] overtime" or even postpone any critical decisions that have anything to do with nuclear power until the dust settles.

According to Krishnaswamy, the nuclear disaster will also shift attention to alternative energy technologies including hydro power and clean coal, and combined cycle power plants. In particular, clean coal technologies such as capture and sequestration (CCS) and integrated gasification combined cycle (IGCC) will get a boost, the analyst said.

Krishnaswamy also expected that "whatever the outcome, insurance costs for all things nuclear are set to rise". Higher insurance costs, he added, will eventually have an impact on electricity costs.

In addition, nuclear stocks will likely take a hit in Japan and around the world. Krishnaswamy pointed out that General Electric, which supplies reactors in Fukushima has already experienced a significant drop in its share price. However, the analyst said there will be "some reprieve" for such hardware suppliers since there are reports that their potential liability is limited.


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