Uranium — Japan: New Nuclear Build Inevitable?

Even under Japan’s conservative nuclear scenario, utilities face a c10Mlbs uranium inventory shortfall. Under a more realistic scenario, the shortfall is dramatically larger.

Japan’s Prime Minister recently stated that the country will “make utmost efforts to avoid market disruptions that were seen in the oil shock era” and “raise the ratio of nuclear and renewable energies to up to 70% from the current 30%.”

At first glance, this appears consistent with Japan’s early 2025 energy plan, which targeted renewables at 40-50% and nuclear at 20% by 2040. What remains unclear is whether the split between nuclear and renewables has shifted. Given the ongoing global energy crisis, we believe doubling down on renewables growth alone is not the answer. Pre-Fukushima, nuclear accounted for 29-30% of Japan’s electricity generation. The current crisis makes a return toward that level increasingly rational.

For our base case, we assume Japan holds to its existing 20% nuclear target. With total power demand forecast at c1150TWh in 2040, a 20% nuclear share implies 230TWh of nuclear generation. Assuming an 80% load factor, already generous relative to the sub-70% Japan achieved pre-Fukushima, this requires 33GW of operable nuclear capacity by 2040.

We estimate Japan’s true operable capacity at c27GW: meaningfully below the WNA’s figure (32GW). We expect two reactors at Kashiwazaki to be decommissioned as a political concession to enable restart of the remaining five. We also believe improved seismic knowledge will prevent the restarts of Tsuruga 2 and the Shika plant. The latter was located near the epicentre of the 2024 Noto earthquake, which challenged prior assumptions about seismic risk in the region.

To meet even the 20% nuclear target, on these assumptions, Japan will need to: (1) resume construction of Shimane 3 and Ohma 1 (1.4GW each), both suspended post-Fukushima; and (2) commission an additional c3.5GW of new build. There are no known legal restrictions in Japan preventing new reactor construction.

Applying pre-Fukushima inventory coverage ratios which are more conservative than Western ones, Japanese utilities would be c10Mlbs short on uranium inventories to support this base case alone.