Taiwan’s Government Faces Increasing Costs of Dismantling No. 4 Nuclear Power Plant and Selling Its Fuel Rods

published: 2018-07-13 14:11 | editor: | category: News

The shutdown of Taiwan’s Lungmen Nuclear Power Plant (aka the Fourth Nuclear Power Plant or the No. 4 Nuclear Power Plant) appears to be official with the shipments of unused fuel rods from the plant to the US starting on 4 July. However, the problematic legacy of this controversial project remains. On account of changing governments and popular opinions, the construction of No. 4 Nuclear Power Plant had been halted, continued, and deferred several times before it was finally mothballed by the current administration that wants to make the island nuclear free by 2025. Consequently, the total bill of the uncompleted plant facility plus the follow-up work to dismantle and store the nuclear generation equipment could run up to over TWD 280 billion. How to deal with this cost, which is borne by the taxpayers and could keep growing, along with the possibility of its reactivation due to the island’s tight electricity supply, have now emerged as hotly contested issues.

Taipower must find buyers for the unused fuel rods by 2020s

Taiwan’s government is currently working towards the goal of closing down all of the island’s existing nuclear power plants by 2025. Since the No. 4 Nuclear Power Plant has never been officially activated, the island’s public utility Taiwan Power Co. (Taipower) has decided to store the fuel rods in the US until 2022 and find buyers for them in the meantime. In accordance with the government’s directive, Taipower shipped the first batch of fuel rods out of the island on 4 July. Currently, there are potential buyers in the UK and Japan. The UK buyer, which represents a newly built nuclear power plant in that country, is purportedly to be highly interested in the fuel rods on account of their good condition. According to reporting by Taiwan’s news media, Taipower originally acquired these fuel rods for TWD 8.1 billion. The utility now wants to recover at least 50% of that amount by selling them to foreign buyers.

On the other hand, the new nuclear power plant in the UK is facing its own problems with financing and public reviews. It is also uncertain that the UK buyer will choose the fuel rods from Taiwan. The other potential Japanese buyer is the Higashidōri Nuclear Power Plant, which is located in the Japanese prefecture of Aomori. The ownership of the entire plant site is divided between Tokyo Electric Power Company Holdings Inc. (TEPCO) and Tohoku Electric Power Co. Inc. TEPCO announced in late June that the company will resume its plan to build one to two nuclear reactors its site area. In response to this news, Taipower said it is possible that the fuel rods can be sold to TEPCO because its Higashidōri project intends to deploy an advanced boiling water reactor that is the same model as the one in the No. 4 Nuclear Power Plant.

If Taipower is unable to find buyers for the fuel rods before the end of 2022, then it will have to spend another TWD 2 billion to extract the uranium from the fuel rods. Pure uranium can be more easily sold on the international market. Taipower estimates that uranium from the fuel rods for the No. 4 Nuclear Power Plant is currently worth around TWD 3 billion, and its price is expected rise above TWD 4 billion in the near future based on the market trends.

Critics of Taipower’s plan have pointed out that the cost of transporting the fuel rods to the US is already estimated to reach TWD 730 million. Furthermore, separating individual fuel rods from their bundles will cost TWD 2.76 billion. During the period when the fuel rods are in the US, Taiwan’s government will also be charged for their storage. If the attempt to sell the fuel rods by 2022 is unsuccessful, then Taiwan’s government will have to pay for the uranium extraction and other processing charges. In sum, critics contend that the total cost of Taipower’s plan will keep growing, and there is no way of knowing if selling the fuel rods will recoup more than half of their original cost.

MOEA says mothballing No. 4 Nuclear Plant may raise electricity price by TWD 0.058/kWh

Even with the sale of the fuel rods and the repurposing of the generation equipment completed, Taipower would be saddled with a bill of around TWD 260 billion for cleaning up and redeveloping the plant site. To avoid to risk of financial ruin, Taipower would have to spread payments over multiple periods and may have to raise the island’s electricity rates. Regarding the strong possibility of increasing electricity prices to offset the cost of dismantling the No. 4 Nuclear Power Plant, Taipower has said it will work hard minimize the effect on the price per kWh for households.

Shen Jong-Chin, the head of Taiwan’s Ministry of Economic Affairs (MOEA), had previously made estimation on the matter of raising the electricity rates to offset the payments related to the mothballing the No. 4 Nuclear Power Plant. He projected that the island’s average electricity price will go up by TWD 0.058, 0.047, and 0.039/kWh if the payments are spread over 20 years, 25 years, and 30 years, respectively. Sheng’s estimation further found that the average monthly electricity bill will also go up by TWD 12-19. Taipower’s latest analysis indicates that the installment payments related to dismantling the No. 4 Nuclear Power Plant will have less effect on the electricity price than predicted earlier. Nevertheless, Taipower has not reveal the strategy to spread out the total cost of shuttering the nuclear power plant.

Although moving the fuel rods to the US formally signals the mothballing of the No. 4 Nuclear Power Plant, the contentious debates over its dismantling process and the role of nuclear power in Taiwan’s energy mix have not subsided. The depreciation of the plant’s generation equipment, the sale of the fuel rods, and the redevelopment of the plant site are the long-term challenges that Taiwan’s government and people will eventually have to deal with.

(This article is based on information provided by Taiwan’s news media with additional reporting by Daisy Chuang.)

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