A crisis in leadership in Japan's nuclear industry.

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By:Nicholas Newman



Failing to make the right decision is easy to do. Regrettably, despite years of technological progress and experience, governments and energy companies continue to make such mistakes. Nevertheless, due to the increasing scale of investment and environmental hazards that the industry faces, the world energy leadership needs to do better than it has in the past.

If it is clear those events at Japan’s Fukushima Daiichi nuclear plant have as much to do with bad decision-making by the country's energy leadership as it has to do with the massive sea quake that caused a tidal wave to hit the doomed nuclear power station. Examining the factors that contributed to the poor decision-making that led to disaster in Japan last year, one comes to the conclusion that the events transpired could have been substantially mitigated or even avoided by the country’s energy leadership.

Here are some of the reasons that contributed to Japan's unpreparedness for such a nuclear crisis and surprising negligence of nuclear power plant safety standards. These factors that contributed to the Fukushima incident range from internee sign fighting between the country’s government agencies (Ministry of Environment and its two regulatory agencies the Nuclear Safety Commission and Nuclear and Industrial Safety Agency) as well as the plant’s owners Tokyo Electric Power Co. Nor did it help that the power plant's operator had been found to have ignored safety advice on several occasion from both domestic and international nuclear professionals such as the International Atomic Energy Agency (IAEA).

It is clear from government reports that the leaderships of various stakeholders in the industry, including Japan's regulatory agencies and nuclear power station operator TEPCO made serious errors which would have been avoided if the organisational culture was more accountable and open to inspection to not only Japan's voters, but also the international community at large.

For instance, there are several documented examples of the national regulatory agencies ignoring the advice of such world agencies such as the IAEA. Reports suggest that the regulatory system was suffering from turf wars and intra-agency rivalries between regulatory agencies and departments of government ministries.


Nor did it help that TEPCO falsified safety records and ignored the advice given to it by both the domestic regulators and the International energy agency revealed in a report by Japan's Independent Investigation Commission. In this report, it was revealed that Japanese electric power companies had since 1980, been unwilling to cooperate with the IAEA 's operational safety review of the country’s power plants. This review known as the Operational Safety Review Team (OSART), is where a team of experts conduct an in-depth review of operational safety performance at a nuclear power plant by checking the factors affecting safety management and personal performance.

In 1992, this operational safety review of Fukushima made a number of recommendations which Tokyo Electric Power Co, subsequently dismissed. In 2002, it was revealed that TEPC had falsified 29 cases of safety repair records regarding cracks found at several of its nuclear reactors, including those at Fukushima Daiichi in the late 1980s and 90s. Despite this, the power company declined the offer by the IAEA to institute a fact-finding process to improve safety at the plant concerned. It was announced by the Chief Executive at TEPCO, that the proposed regulations were unrealistically strict and not in accordance with actual operational requirements.

Nor did it help that the entire nuclear community of the country was suffering from isolationist and secrecy tendencies, which were not helped by delusions that the country's nuclear power sector was the best regulated, most advanced and managed industry in the world. The perception amongst many Japanese nuclear professionals was there was no need for Japan to learn from the rest of the world. In a sense Japan's nuclear community was suffering from classic Galapagos Island syndrome symptoms.

Much to the surprise of these professionals the events at Fukushima were a wake-up call; it became clear from various investigations that Japan's nuclear power sector was rotten to the core. It became clear that the industry was totally unprepared for the crisis when it occurred and was not able to provide solutions to such a crisis. It did not help that many of those civil servants working in nuclear regulation and safety management, did not have the opportunity to develop long-term expertise in the subject, because of the practice of regularly rotating civil servants to other government ministries. In addition, it did not help that findings found that the regulators were not truly independent of the power companies they were supervising.

Unfortunately, breaking out of the Galapagos syndrome for Japan's nuclear sector is going to prove hard task. Japan will need the help of the international community to create a new decision making energy leadership culture so that it equips it with the tools to avoid such complacency and a repeat of such disastrous mistakes. There are plans to establish a new, powerful nuclear safety agency this summer that will replace the old agencies and ministerial departments. Unfortunately, many of the new staff for this new agency will come from the failed organisations that contributed to Japan's nuclear disaster.

However, perhaps the best way to revolutionise Japan’s nuclear community is if it imports new leadership and experts from abroad, until Japan has trained up the necessary recruits in the standards of the world nuclear community. Unfortunately, foreign CEOS leading Japanese companies are rare and tend only to stay a short time due to inherent organisational resistance to change. In addition, Japan, the country finds very difficult to change its organisational culture, given the extremely conservative, traditional nature of its society. This is despite its appearance as one of the world's most technologically advanced nations. This can be seen by its failure to implement the radical changes required to break the country out of economic stagnation in recent years.

Japan's government wants to restart two nuclear plants to avert summer power shortages this summer, but public skepticism of nuclear safety and the industry remains high. Before March 2011, Japan depended for 30% of its power from nuclear power plants. Unless Japan can make the necessary changes it is unlikely there will be public support for the country’s nuclear power stations to start operating again. Instead the country’s energy leadership will have to continue to depend on expensive renewables and imports of gas from Australia to fuel its power sector in order to maintain energy security.

See also East Asia - a nuclear hotspot?

Japan's natural disaster will boost demand for LNG imports.

Power Sector Troubles in Southern Europe!

Times are tough for the power sector in Portugal, Spain, Italy and Greece. Troubles with the euro are forcing governments to cut back on investment and subsidies for power generation and increase power prices in Southern Europe. As a result, dreams to achieve energy security are increasingly a more distant prospect as the investment climate becomes more difficult for investors to achieve such ambitions. In Spain we have seen the government look with more interest at the possibility of shale gas in the Basque country and offshore drilling for gas in the Canary Islands, providing a new solution for its power sector. However, in Italy, the failure of Berlusconi's dreams for a nuclear Italy mean that, renewables will play a greater role in fulfilling Italy's energy security prospects. However, in all the countries concerned energy policies will be limited by fiscal constraints and political uncertainties.

http://www.oxfordprospect.co.uk/Italy-Power-Review.html

Latin America and uncertain place for investors despite its economic growth.

Last week was bad news for foreign investors in Argentina; the question is, will investors in other Latin American countries face similar uncertainties. Currently, countries such as Brazil, Chile and Colombia are experiencing rapid growth, which is viewed with envy by many Western governments. However, like in other prosperous countries throughout the world, the problem of providing secure and affordable, sustainable power supplies is never-ending.

Many countries in the region have opted for Hydro solutions which have met with opposition from environmentalists; others are looking at traditional solutions such as coal and gas. However, some countries have begun to take a late interest in exploiting none Hydro renewable technologies such as solar, geothermal, wave, tidal and wind. Already we've seen Brazil rapidly turned round its power sector so it is no longer the region’s Nigeria when it comes to affordable power supplies.

In Argentina, we are likely to see the countries desperate need for power to be solved in part by the recent discovery of shale gas deposits in the north-west of the country. However, how rapidly it can utilise such discoveries will depend on how all Argentina is viewed by foreign investors, as a result of the recent partial nationalisation of Spain's Repsol. This feature will look at the activities of investors such as International Power and technology providers such as Siemens in providing solutions to meeting the regions power sector needs.
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Forecasting the future of UK gas supplies

"A concern for gas security "

By: Nicholas Newman
Forecasting the future is always full of uncertainties, there are too many doubts such as Black Swan's, banana skins and acts of God that can make a forecast disastrously wide of the mark. Well despite all these afford mentioned uncertainties, a group of Britain’s leading industry gas experts were precisely trying to predict the future of gas supplies for the UK at the behest of OFGEM, at a seminar held on 2 February 2012 at London’s Institute of Mechanical Engineering. Amongst the questions asked were the following:

· Where will future gas supplies come from?

· Will there be sufficient gas around and how much will it cost?

· Does Britain need more gas storage capacity?

· How stable will gas prices be and how secure will gas supplies be?

· Is the UK becoming dangerously vulnerable to the dependence on imports of gas supplies from Qatar?

· Will America start export gas from 2014 onwards?

In the past the main concerns for Western Europe were doubts about the price, availability and security of supplies of Russian gas to the European Union. In the future, Howard Rogers at the Oxford Institute of Energy Studies suggested that other factors including:

· Future developments in American gas production, especially the growth in shale gas production,

· Asian and European competition for Qatari LNG gas deliveries, especially as Britain becomes increasingly reliant on gas shipped from Qatar.

· The timing of the start of US gas exports to Europe. Already, traders have factored the arrival of forward European gas prices, which at least in the short term should depress the cost of wholesale gas prices for a short while. Alistair Buchanan Chief Executive of OFGEM has suggested that by 2014, the United States will be ready to export its surplus shale gas production to Europe, once it's LNG import terminals on the East Coast and Gulf of Mexico have been converted to LNG export terminals, which include the proposed plants at Corpus Christi Texas and the Cove Point unit in Maryland. However, the prospect of US gas exports to Europe is still not yet a done deal with the current Obama administration, due to the American government’s own concerns to achieve long-term energy independence.

· However, Alistair Buchanan, noted that America’s ability to export gas, will also depends on how quickly U.S. regulators push for a switch from coal to gas power for electricity generation and how quickly its economy grows in the coming years.

While Anne-Sophie Corbeau at the International energy agency suggested other factors will have to be added into Britain's gas supply equation. These include:

· The security of gas supplies from the world's leading LNG gas exporter Qatar, given that its northern neighbour is Iran. The latest UK government figures suggests that Qatari LNG imports amounted to 52% of the total gas consumed in the first nine months of 2011; this is up from 11% in 2009 as a whole. The trouble Britain is that Qatar not only exports to Britain and other European states, but also to Asian states such as China, South Korea and Japan. We've already seen as a result the closure of several Japanese nuclear power plants a spike in the price of gas has as Japanese power produces and switched to imported gas to make up for the loss of nuclear power generating capacity. In future years we're likely to see growth in gas prices due to the increasing demand for gas Asian power generators as their economies continue to grow. This will mean Qatari gas become an increasingly expensive proposition for European gas consumers.

· The growth in Asian demand for gas imports and the impact that nuclear power station building programs such as in China are likely to have on the growth of demand for gas.

It is not surprising that Britain is looking desperately for alternative gas supplies, such as American shale gas exports, development of shale gas in Europe and even by the end of the decade imports of gas from Australia.

In addition, Poyry energy consultant and expert on shale gas Lucy Fields has pointed out that due to various difficult environmental, legal and geological factors, Europe is unlikely to experience a repeat of the American shale gas revolution. Instead, the arrival of shale gas production is likely to be more modest in impact. In addition, some expressed that once Australia's supergiant offshore gas fields become fully operational such as Wheatstone and Gorgan, Britain will be able to import LNG gas from there.

Lastly, this seminar total to the issue of what is energy security, Pierre Noël from Cambridge University’s Electrical Policy Research Group, defines energy supply security as the ability of the energy system to meet contracted final energy demand under a gas supply disruption, at peak time. However, risk adverse politicians tend to not trust the ability of the international markets to top up supplies as required. Also, for political and economic reasons, they are against sudden price spikes caused by disruption to supplies, even though economists will regard such market developments as an efficient method of rationing gas supplies. Instead, our political energy leaderships will seek methods to reduce the potential for such disruptions will have on gas supply availability. As a result, of the disruptions caused by though Russian Ukrainian gas disputes, European Union member states adjusted the market conditions in Europe to encourage greater cooperation between operators and increased capacity for storage, in order to insulate europe’s gas market against such emergencies. Such proactive action was much to the annoyance of Europe's gas suppliers such as Gazprom and Sonatrach, since such developments weakened such producer’s ability to influence the market.

In Britain, there has been much political concern that Britain has insufficient gas storage capacity. Though, many market operators would disagree. The UK’s current storage capacity amounts to only 14 days’ worth of gas supply—a dangerously low level compared with France which has 87 days’ worth of gas storage, Germany 69 and Italy 59, according to last December’s report by MPs on the Energy and Climate Change Committee. However, the reality is not as clear-cut as it initially appears. It has been argued by some energy analysts that the reason gas storage capacity has not been significantly increased in recent times are because of the following factors:

· Britain has massive gas import capacity, via its interconnector’s with the continent, especially the Norwegian gas fields.

· Also, due to developments at Milford Haven in Wales and, the United Kingdom has significant LNG import capacity.

· Further, there is sufficient capacity to cope with most peak time disruption scenarios in the years ahead.

· UK security of supply relies on its ability produce some gas itself and its ability to import gas from both European and global markets.

Unfortunately, in Europe's efforts to increase gas price competition by weakening the influence that oil price indexation has on Europe's wholesale gas prices. Europe is likely to face increased price and supply volatility as increasingly gas supplies will be obtained on the spot markets rather than through long-term contracts.

In order to improve their U.K.'s ability to withstand gas supply disruption the government has given the go-ahead for Gateway Storage Company to construct a new offshore gas storage facility, not far from Barrow in Furness in Lancashire. Once completed, the undersea caverns will have a working gas storage capacity of 1.52 billion standard cubic metres (~562 million therms), adding nearly 30% to the current UK gas storage capacity. Once this facility is completed in 2014, the United Kingdom should have a similar storage capacity for gas equal to that of Holland and in the longer term investors have plans to double the U.K.'s current storage capacity, equally that of either France or Germany.

This seminar was part of OFGEM's first major effort to gather industry views on the UK's gas supply prospects following the DECC request last year, an OFGEM spokesman said. However, what this seminar revealed was the major differences between gas producers, traders, consumers and regulators about the future course of UK gas supplies. It also revealed how black swans such as the arrival of the American shale gas revolution was unforeseen by many experts just a couple of years ago. Though, I suspect a future black swan will be the impact that the Arab Spring will have on Europe’s future gas supplies.In addition, the debate in the question-and-answer sessions revealed how successful acts of God such as European energy policy has been on affecting the growth in demand for gas and how the market can be made to operate to meet the greater good of the economy. As for banana skins, the un-intended consequences of the drive to the index gas prices from oil prices is a good example. In the long term, it looks like European gas prices will continue to increase, due to increased demand by European, Asian and American power generators. However, the real question is, where will Europe be obtaining its future gas supplies. I would not be surprised that the European Union will be developing new gas fields in the Arctic regions in the long term.

For details of the slides used in seminar see:

http://www.ofgem.gov.uk/About%20us/PwringEnergyDeb/Pages/PwringEnergyDeb.aspx

The World Is Not Desperate For Energy in 2012!

Current forecasts suggest that global energy consumption will only increase by 3% in 2012, not much different from 2011. This is not surprising given the state of the world economy. Current market figures suggest that like in 2011, the world will enjoy a net surplus of energy capacity.

Take oil, production is likely to again to outpace global demand; such a prospect will once more disappoint peak oil Cassandras. There are several reasons for this; the first is the coming on stream world wide of a number of new offshore projects in Nigerian, Angolan, Brazilian and Gulf of Mexican waters. In addition, increased Libyan and Iraqi oil production coming on stream in 2012 will add significantly to global oil supplies. However, will this be sufficient to reduce current oil prices from around $90 a barrel today to what they were in 2009 when it was $60 a barrel, is anyone’s guess. Yet, such a drop in price would give a welcome boost to the world economy.

Nevertheless, despite investment by many countries in renewables, decision makers are still investing in new cleaner coal based power, which is pushing up coal’s share in the global energy mix. Already, both China and India have placed their faith in increased coal use, this is not surprising given its strategic, economic and energy security advantages. After all coal provides a cheap source of fuel to power all those new laptops, televisions and air-conditioning units that increasing numbers of their fortunate citizens can afford to use.

Yet, the big winner in 2012 is forecast to be gas. During 2012, new commercially significant natural gas supplies are due to come on line in Qatar and Australia. Already, it is fortunate for Japan due to its on-going nuclear outages that such additional LNG supplies are available during its current power shortages, which are likely to last for several years. In addition, unconventional gas will increasingly play its part; already Australia and the United States have well advanced plans to export unconventional gas as LNG to markets in North Asia and Europe. In fact some market makers in Europe are complaining that Europe from too much gas and competition being available in the market. As for elsewhere in the world, there are less advanced plans to exploit unconventional gas for regional markets in Argentina, Poland, South Africa and China. Such developments are likely to change the shape of energy geopolitics in the near future.

Though the future progress of unconventional gas is likely to be affected by the results of reports, due out in early 2012, by the Environmental Agencies of the EU and US into the impact that fracking has on the water table.

As for nuclear, after events at Japan’s Fukushima Daiichi nuclear plant, one would have thought we had seen the end of nuclear power. Certainly, Germany thought so when it pulled the plug on its nuclear power programme. Well, in fact forecasters are suggesting the future looks bright in many countries, whilst in America and Japan these countries have dithered about a nuclear future. Other countries like Britain, France, China, Russia and South Korea have improved their designs and moved ahead with their programs. In fact, it is likely that half the world’s new nuclear power plants will be completed in such countries as China, Taiwan, Thailand, Indonesia, Vietnam and South Korea by 2050. It is forecasted that by 2020, China is expected to increase its nuclear generating capacity seven fold and South Korea to double its nuclear power capacity.

Over all the future looks bright especially for gas; however, the world will continue to experience at regional level problems providing sufficient capacity to turn raw energy into a useful power source.
Nicholas

GARRIGILL NAMED BRITAIN’S SOLAR PANEL CAPITAL

A tiny village in Cumbria is laying claim to be Britain’s solar panel capital.

At least half a dozen residents out of just 200 in Garrigill have had panels installed – beating by days the Government’s controversial reduction in Feed-in-Tariff subsidies.

And other residents and potentially even the village hall are expected to go ahead with installations next year. All of the installations have been carried out by leading renewable energy company Eco Environments.

One villager, Fiona Gifford, who has had a 12-panel Sanyo system fitted, said: “A few of us had been talking about having solar panels installed for a while.

“As soon as the Government announced it was cutting the Feed-in-Tariff subsidies available, we decided we had better get a move on.

“By getting in ahead of December 12, when the reduction is due to come into force, the financial returns are extremely attractive. I expect my system to have paid for itself in about eight years. With electricity prices only set to go up, installing solar panels made total sense.

“Although we have been able to get our panels installed before the deadline, we believe the Government should have allowed a longer consultation period. The villagers felt so angry we wrote to our local MP Rory Stewart to protest.”

Other villagers who have gone ahead with installations are Tim Haldon and Jules Cadie, who have had 18-panel Sungrid systems installed, Paul Lincoln, an 18-panel Hyundai system, Laurie MacDonald, a 10-panel Hyundai array and Janette Thorley a 14-panel Sungrid system.

David Hunt, a director with Eco Environments, said: “For a village as small as Garrigill, the interest and uptake has been phenomenal. The village may even be Britain’s solar panel capital!

“We have worked round-the-clock to ensure that all of the current installations are up and running before December 12, but we are hopeful that as the word spreads, more of the villagers will want to install their own arrays next year.

“While the current subsidies are incredibly attractive, the post-December 12 tariff levels are still excellent especially when allied to the anticipated reduction in the cost of the panels.”

Eco Environments, which has its head office in Liverpool and regional offices across the UK, took three months’ orders in just two weeks following the news that the cuts would kick-in from December 12.

As of next week, the tariff for Solar PV schemes up to 4kW will be cut from 43.3/kWh to 21p/kWh.

Eco Environments is led by its three directors, Mike Clarke, David Hunt and Mark Buchanan, and employs 46 people compared to 11 at the same time last year. It is on course to increase turnover from £1.4million to £5million during the current financial year.

Eco Environments designs, installs and commissions renewable energy solutions for the domestic, commercial and construction sectors. It offers a comprehensive range of technologies including Solar Photovoltaic (PV), wind turbines, solar thermal and air source heat pumps. It is one of only a small number of companies to have successfully secured Microgeneration Certification Scheme (MCS) accreditations for all four of its specialist areas.

Apart from its new head office in Liverpool, Eco Environments has regional offices in Carlisle, Newcastle, Manchester, Leeds, Birmingham and North Wales. During the next few months, further offices will open in the south of England. Staff numbers will also rise to approximately 60 during the current financial year.

· www.eco-environments.co.uk

 

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