The Finance Ministry in Japan is exploring a system to incentivize the construction of new nuclear power plants by allowing electricity companies to pass on construction costs to consumers through increased electricity rates. This proposal comes amidst concerns about rising energy demands and the need for decarbonized power sources.
The high cost of safety measures implemented after the 2011 Fukushima disaster has made electric power companies hesitant to invest in new nuclear plants. The proposed system aims to alleviate this financial burden by allowing companies to recoup construction costs through electricity rate hikes.
The model under consideration is based on the "RAB model" used in Britain. Under this model, the retail electricity company bears the construction and maintenance costs of a nuclear plant once construction begins. These costs are then recovered through increased electricity rates. Notably, any increase in construction costs deemed necessary can be included in the fee. Additionally, the government provides financial compensation if the project is suspended.
While the system offers financial incentives for building new nuclear plants, it raises concerns about cost burdens on consumers. Even those who opt for 100% renewable energy sources may end up paying for the construction of nuclear power plants through increased electricity rates.
This proposal marks a shift from the past, where the costs of power plants and transmission networks were factored into electricity prices. However, deregulation of the electric power industry in 2000 led to the gradual elimination of this system, resulting in the closure of non-cost-effective power plants and suppressed investment in new ones.