Nuclear Power Plants Shutdown and Alternative Power Plants Installation: A nine-region spatial equilibrium analysis of the electric power market in Japan

After the Great East Japan Earthquake and the subsequent nuclear accident, nuclear power stations no longer can be presumed to be perfectly safe and thus hardly can be allowed to restart in Japan. In this study, we develop a nine-region spatial equilibrium model of the Japanese power market and simulate two-part situations: (a) none of the nuclear power plants can operate any longer and (b) gas turbine combined cycle (GTCC) power plants are installed to fully cover the lost capacity of the nuclear power plants. If all of the nuclear power plants are shut down, average power prices would rise by 1.5-3 yen/kWh. By replacing that lost capacity with the GTCC power plants, we could compress the average price rise by as high as 0.5-1.5 yen/kWh compared with the status quo. Their impact, however, would differ by region on the basis of the share of nuclear power in their plant portfolios. When nuclear power is fully available, inter-regional transmission is mainly driven by the abundant base-load capacity, including nuclear power, at night. After the nuclear power plant shutdown, regions with abundant nuclear power capacity would not be able to afford to sell their power to other regions, causing less serious congestion at the inter-regional transmission links. The installation of GTCC power plants would make the plant portfolios more similar among regions and reduce inter-regional transmission further, which would very rarely cause congestion. When we assume only boiling water reactors or old plants are shut down, the results indicate less serious impacts.