TEPCO’s Call for Energy Bid, All 3 Bidders Will Use Coal

Since February 2013, Tokyo Electric Power Company (TEPCO) has been seeking applications for 2600 MW of thermal power that will start operation from 2019~2021. The application process closed on May 24th and the following results were announced.

The bids came from 1 iron and steel company and 2 electricity and gas companies, all three choosing coal power as expected. According to a broadcast, the 3 companies are Chubu Electric Power Company, Nippon Steel & Sumitomo Metal Corporation, and Electric Power Development Company (J-Power), with a total 680 MW. Chubu Electric plans to build a power plant within the site of TEPCO’s Hitachinaka power plant and J-Power within the site of Nippon Steel& Sumitomo’s Kashima iron works plant. Both plants would begin operation in 2020 and generate roughly 600 MW, planning to sell power to companies besides TEPCO. TEPCO is expected to announce the successful bidding candidate(s) late June and the winning bidder(s) late July.

The result is below the 2600 MW mark, illustrating TEPCO’s misjudgment of the present situation in which the low ceiling price (9,530 yen/ kWh) is not reasonable. Furthermore, the reasoning for constructing the power plant is questionable, since TEPCO’s plan by 2030 is based on the assumption that the demand of power will drastically increase in the future.

Regardless of which company wins the bid, the fact does not change that building the coal fired power plant for 2020 is illegitimate. There is a possibility that TEPCO will redo the bid with different bidding conditions but, as so few companies showed interest, TEPCO should go further and consider terminating the project itself.