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ECONOMY > Energy

Japan to scrap Turkey nuclear project

  • December 4, 2018
  • , Nikkei Asian Review , 2:02 a.m.
  • English Press

Post-Fukushima safety measures doubled costs for Mitsubishi and partners

Japan’s Prime Minister Shinzo Abe, left, and Turkey’s then-Prime Minister Tayyip Erdogan shake hands after agreeing to deepen cooperation in nuclear power generation in Istanbul in October 2013.  

TOKYO — A Japan-led public-private consortium is set to abandon a Turkish nuclear power project that had been touted as a model for Tokyo’s export of infrastructure, Nikkei has learned.


The delayed project’s construction costs have ballooned to around 5 trillion yen ($44 billion), nearly double the original estimate, making it difficult for lead builder Mitsubishi Heavy Industries and its partners to continue with the plans.


The increase was due to heightened safety requirements in the wake of the 2011 meltdown at Japan’s Fukushima Daiichi nuclear power plant. The recent fall in the Turkish lira has also contributed to the cost increases.


The decision to cancel the project, now in final negotiations among the parties, comes as a blow to Japan’s nuclear industry, which is looking for avenues for growth overseas as it becomes increasingly unlikely that a new plant will be built at home post-Fukushima.


The Japanese and Turkish governments agreed in 2013 on the project, with an alliance of Japanese and French businesses centered on Mitsubishi Heavy to build four reactors in the city of Sinop on the Black Sea. Initial plans had construction beginning in 2017, with the first reactor coming online in 2023.


Mitsubishi Heavy submitted the revised cost estimate to the Turkish government in a late-July report. Though the company worked to rethink the overall costs, apparently no compromise could be reached with the Turkish government on financing terms, as well as prices for the electricity generated by the plant. Top Mitsubishi Heavy executives have said the company’s decisions would be based “within the scope of what is economically rational.”


Despite the nuclear plant’s cancellation, the Japanese government intends to continue support for Turkey’s energy sector, and new frameworks for cooperation are under consideration. Details remain to be settled, but building an advanced coal plant with reduced carbon dioxide emissions appears to be among the proposals on the table.


Japan’s Ministry of Economy, Trade and Industry and nuclear plant builders such as Mitsubishi Heavy have worked in tandem to pursue nuclear projects overseas. With the Turkish plan canceled, the only remaining overseas project will be a plant in the U.K. planned by Hitachi. Hitachi signed a memo to advance the project in June with the British government, and parties are hurrying to iron out a final deal. But hurdles remain, including requests from London to trim the total cost.


Japan’s effort to line up more overseas projects is aimed in part to maintain the scale of the country’s nuclear power industry, as well as its skill in related technologies. If the energy sector remains mired in a harsh business environment, industry consolidation could accelerate.


In 2017, global investment toward building new nuclear projects plunged roughly 70% year on year to $9 billion, according to the International Energy Agency. With safety costs rising, nuclear has grown less competitive with other forms of energy.


A number of aging Japanese reactors are set to be decommissioned soon, with Kansai Electric Power planning to scrap the Nos. 1 and 2 reactors at its Oi plant in Fukui prefecture, and Tohoku Electric Power the No. 1 unit at a plant in Miyagi Prefecture’s Onagawa. Meanwhile, new nuclear projects have hit a standstill in the face of deep public wariness.

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