An update on the Sandy-related damage, market closures, and the alert about the Oyster Creek nuclear plant. Read more
Japan will inject Y1,000bn ($12.9bn) of fresh capital into Tokyo Electric Power, owner of the Fukushima Daiichi nuclear power plant, in effect nationalising the financially strapped utility, according to people familiar with the matter. Tepco, Asia’s largest private utility by sales, has lost 90 per cent of its market value since reactors at Fukushima melted down last March after Japan’s earthquake and tsunami. Its shares closed up 5.5 per cent on Thursday in response to news that a deal was imminent; the company is expected to decide finally on the fundraising by the middle of next month, the FT reports. Also on Thursday, a delegation from the International Atomic Energy Agency arrived in Japan to check the safety procedures of the country’s third-largest nuclear power plant, reports the WSJ. Only four of the country’s 54 reactors are currently operational, as many were never switched back on after the earthquake. Reactors are, in the normal course of events, shutdown every 13 months to allow for maintenance. Read more
Tokyo Electric Power shares surged after a report said the company will accept 1tn yen ($13bn) as part of an effective government takeover to save it from collapse after the Fukushima disaster, reports Bloomberg. The Yomiuri newspaper, citing unidentified people familiar with the matter, said on Thursday the utility is in talks with the government-backed Nuclear Damage Liability Facilitation Fund on the size of the stake it will take. Tepco wants to keep the fund’s voting rights below 50 percent by using preferred shares while the government aims to obtain more than two-thirds, the Yomiuri said. Tepco shares rose as much as 12 per cent by mid-morning in Tokyo. Reuters also cited a source as saying Tepco would agree to be effectively nationalised. Read more
Tokyo Electric Power detected signs of nuclear fission at its crippled Fukushima atomic power plant, Bloomberg reports. Officials said no increase in radiation was found at the site and the situation is under control. Tepco began spraying boric acid on the No. 2 reactor in the early hours of Wednesday to prevent accidental chain reactions, according to an emailed statement. The detection of xenon, which is associated with nuclear fission, was confirmed on Wednesday by the Japan Atomic Energy Agency, the regulator said. “Given the signs, it’s certain that fission is occurring,” said Junichi Matsumoto, a general manager at Tepco, adding that there had been no large-scale or sustained criticality and no increase in radiation, he said. Read more
Tokyo Electric Power will ask the government for 900bn yen ($12bn) to avoid bankruptcy, according to a report in the Nikkei newspaper, reports Bloomberg. It would bethe first state support since the Fukushima nuclear disaster almost eight months ago. The newspaper said trade and industry minister Yukio Edano may sign off on a finance plan for Tepco as early as next week. Tepco will commit to cutting costs by 240bn yen and raising as much as 400bn yen from asset sales by the end of March. Executives of the company at the centre of the nuclear catastrophe will agree on the plan today, the Nikkei said. Read more
The German consortium planning to build new nuclear plants in the UK is negotiating a cash injection of up to €5bn in exchange for a 25 per cent stake, the FT reports, citing people familiar with the situation. Eon and RWE, which together form the Project Horizon consortium, are currently evaluating rival offers to provide the reactor designs for the plants from Toshiba of Japan, which owns Westinghouse, and France’s Areva. The proposal for an equity stake was raised during a series of meetings between the German utilities and Toshiba in London and Düsseldorf from July to discuss the financing of the project, according to people familiar with the talks. One industry source said similar discussions had taken place with Areva. Read more
Plans to build a new generation of nuclear power stations in the UK are expected to receive a green light today from the final report on lessons from the Fukushima disaster in Japan, the FT reports. The government asked Dr Mike Weightman, head of the Office for Nuclear Regulation, to examine the accident in Japan after the reactors at Fukushima were struck by an earthquake and a tsunami on March 11. The aim was to identify any implications for Britain’s ambition to construct up to 12 new reactors at eight identified sites. Mr Weightman released his interim findings in May, containing 26 recommendations for the British nuclear industry. But his conclusions did not impose any significant additional constraints on the programme to construct new reactors. Mr Weightman’s final report is expected to confirm this conclusion. Read more
Toshiba is in talks to buy Shaw Group’s 20 per cent stake in nuclear power-plant company Westinghouse Electric, the WSJ says, citing people familiar with the matter said. Talks could still fall apart, the report says. Toshiba owns 77 per cent of Westinghouse Electric while Shaw, a Louisiana-based engineering services company, is its only remaining US owner. An agreement between Shaw and Toshiba when the Westinghouse was acquired for $5.4bn in 2006 includes an option for Shaw to sell its stake before bonds Shaw issued to fund its purchase matured. Toshiba shares fell more than 5 per cent in Tokyo on the report, says Bloomberg. Read more
A leading contender to replace Naoto Kan as Japan’s prime minister has called for the country to phase out nuclear power over the next two decades. Seiji Maehara, one of the most popular figures in the ruling Democratic party, told the FT in an interview that construction of new nuclear reactors should “basically be stopped” following the crisis at the tsunami-crippled Fukushima Daiichi atomic plant. A Japanese retreat from atomic power would have far-reaching implications for domestic utilities and companies such as Toshiba, Hitachi and Mitsubishi Heavy Industries, which are seeking to sell nuclear technology overseas. Mr Maehara was vague about plans for nuclear plants that are under construction, but his raising of the issue could put it at the centre of any election to replace Mr Kan. Read more
Japanese industrial output recorded its second-biggest rise ever in May, Reuters reports, as manufacturing was revived after the devastating disasters of March. Industrial output rose 5.7 percent in May, compared to Reuters’ median market forecast for a 5.5 per cent increase and a gain of just 1.6 per cent in April. Although the figures raised hope of the economy emerging from the post-disaster slump, electricity shortages over summer mean smaller gains are likely to be seen in the coming months. Read more
A strip of land holding back rising floodwaters from Nebraska’s 484-MW Fort Calhoun plant collapsed on Sunday, surrounding containment buildings and key electrical equipment with Missouri River overflow, reports the WSJ. Nuclear Regulatory Commission inspectors verified that processes to cool the reactor and spent-fuel pool were unaffected, according to a press release. Cooper Station, a second reactor threatened by Missouri River flooding, is still running despite rising water, writes the New York Times. Read more
Germany will close its 17 nuclear power plants – which generate one-quarter of the country’s electricity – by 2022, following the partial nuclear meltdown at Japan’s Fukushima Daiichi plant in March, reports the FT. In a controversial move, amid industry warnings about price rises, chancellor Angela Merkel committed Germany to doubling the amount of electricity from renewable sources to 35% this decade. She had previously decided to prolong the operation of Germany’s nuclear plants by 14 years to 2036, saying they were a necessary bridge to greater use of renewable energy. After talks between her Christian Union party and their Free Democrat coalition partners on Monday, Merkel described the policy U-turn as “a big challenge” which nevertheless would make Germany a leader in green technology. Opinion polls show most Germans oppose nuclear energy. Read more
For the commute home, where the carry trade means helping your better half unload the car in exchange for first dibs on the remote,
- The FT visits Bernie Madoff. Read more
The owner of the stricken Fukushima Daiichi nuclear power plant in Japan will review all its data on radiation levels recorded at the site, amid confusion over how much radioactive material has flowed into seawater around the plant, the WSJ reports. Confusion also reigns over whether the Japanese government will nationalise or break up Tokyo Electric Power, with compensation claims on the company so far yet to be assessed, FT Alphaville says. Officials hope to prevent conditions at the plant from further deterioration within weeks, but caution that decommissioning will take years, reports the FT. Read more
Engineers estimate that the Fukushima plant’s four stricken nuclear reactors will require three decades and $12bn to decommission, says Bloomberg. Shares in the plant owner, Tokyo Electric Power, plunged another 17 per cent overnight as the company revealed its CEO is now hospitalised, and speculation continued that government will nationalise it, the FT reports. Tepco’s stock is now at its lowest in five decades. The Japanese nuclear safety agency said on Wednesday that radioactive iodine levels in the sea outside the plant are now 3,355 times the legal limit, Reuters reports. Controlling leaks from the plant could take many months. Read more
Efforts to repair cooling systems at two of the Fukushima nuclear plant’s stricken reactors are being delayed by the need to drain radioactive water from the floors, the FT says. Tokyo Electric Power, the plant’s owner, said it did not know why the water had such high radiation levels. But a government official said that the levels likely came from fuel rods that had partially melted down and come into contact with water coolling the reactor, reports Bloomberg. Tepco announced on Monday that radioactive water had now been found outside reactor buildings as well, Reuters reported on Monday. Read more
For sale, offers over £400,000:
Bankers at Sumitomo Mitsui were returning a 14-year-old favour to Tokyo Electric Power when they pulled together a consortium this week to offer Y2,000bn in emergency loans to the utility at the centre of Japan’s nuclear power plant crisis, reports the FT. When the bank faced liquidity problems in the Asian financial crisis in 1997, Tepco, a loyal customer with a top-notch credit rating, raised about $2bn at low rates from western banks, say people close to the matter. It promptly put the cash on deposit at Sumitomo Mitsui, helping the bank through the crisis. Now, after it resolves the current crisis, Tepco is likely to see upheavals amid debate on how it is to be regulated. But one government official dismissed suggestions it could lose its nuclear licences, forcing the state to take over its plants. Read more
Japan has widened a ban on shipments of spinach and milk from areas around the crippled Fukushima Daiichi nuclear power station, after levels of radiation found in samples exceeded legal limits, reports the FT. Other countries including China and South Korea have stepped up monitoring of food imported from Japan. Tokyo Electric Power will compensate local farmers, the FT adds. Read more
Ever wondered why there was so much spent fuel in water pools around the Fukushima nuclear plant? We have.
Only we’d never realised the answer’s striking lesson (metaphor?) for tail risk in financial — especially, energy — markets. Read more
Emergency crews at Japan’s earthquake-hit nuclear plant in Fukushima prevented the radiological crisis from spinning further out of control on Friday, but their efforts appeared to be too late to prevent contamination of areas around the site, says the FT. Radiation readings in one area roughly 30km from the power station – beyond a 20km evacuation zone that has been in place since Saturday – were 100 microsieverts an hour on Friday morning, more than 200 times normal levels. Meanwhile, the Guardian reports the IEA has urged Japan to give more information on nuclear crisis. Read more
While you were sleeping…
Statement from the G7: (emphasis ours) Read more
Beijing announced on Wednesday that it had suspended approval for nuclear power plants across the country, putting the brakes on a development programme that accounts for almost 40 per cent of the world’s planned reactors, says the FT. The decision, both unexpected and uncharacteristic of a government that usually races ahead with ambitious infrastructure projects, was taken in response to the Japanese nuclear crisis triggered by last week’s devastating earthquake and tsunami. BNET noted earlier that more than 25 reactors are already under construction in China. Read more
Beijing announced on Wednesday that it had suspended approval for nuclear power plants across the country, putting the brakes on a development programme that accounts for almost 40 per cent of the world’s planned reactors, reports the FT. The decision, both unexpected and uncharacteristic of a government that usually races ahead with ambitious infrastructure projects, was taken in response to the Japanese nuclear crisis triggered by last week’s devastating earthquake and tsunami. The confirmed death toll from the twin natural disasters rose to 4,340 on Wednesday. Read more
A nasty stasis in shares in E.ON, RWE and EDF at pixel time:
Here’s a nice piece of research from Barclays Capital.
The UK bank has enlisted the help of a former nuclear safety employee to discuss events at Fukushima Daiichi, the Japanese nuclear plant hovering on the edge of meltdown. For what it’s worth, BarCap’s energy team doesn’t think there was an operator error at the plant — the force of the earthquake combined with the effect of the tsunami “simply exceeded what the plant was designed to withstand.” Read more
Natural gas prices have jumped as dealers are braced for Japan to step up its purchases to replace the large amounts of nuclear power capacity knocked out by Friday’s disaster, reports the FT. Japan is the world’s largest buyer of liquefied natural gas, a form of super-cooled gas shipped in tankers from exporters such as Qatar and Algeria. Any abrupt change in its energy demand could therefore affect commodities markets. FT Alphaville says it’s time to start watching the uranium-fossil spread. Read more
Japan appears to be losing control of its nuclear crisis after fresh explosions at an atomic plant north of Tokyo released more radiation into the air, prompting the prime minister to appeal for calm, the FT reports. Earlier in the day, Mr Kan lambasted Tokyo Electric Power (Tepco), the nuclear plant’s operator, for its handling of the crisis. Mr Kan said the power company had been slow to report the initial cascade of system failures stating with reactor No 1 and containment problems at the site. FT Alphaville adds that a spent fuel leakage has been confirmed at Fukushima Daiichi plant Read more
Japanese nuclear authorities evacuated non-essential personnel from a crippled nuclear power station on Monday, reports the FT. An apparent explosion damaged part of the protective shielding on one of its overheated reactors, creating the risk of a more serious radiation leak. The damage occurred in part of the Fukushima Daiichi facility’s No 2 reactor known as the suppression chamber, which was believed to have been filled with contaminated water and air. The extent of the damage was unclear but elevated radiation levels were detected in the area immediately around the station. The reactor’s innermost core, which holds its fuel, was said to be intact. In a national address, Japan’s Prime Minister, Naoto Kan, said that “high levels of radioactivity” could be released into the air and the risk of radioactive leakage was increasing, reports Reuters. In spite of rising concern, another Chernobyl is highly unlikely, according to experts interviewed by the FT. Read more
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