Japan Hunkers Down

April 18, 2011 9:30 AM

As disaster relief operations proceed in Japan, ongoing problems in power generation are expected to extend into the fall, if not beyond.

Japan is facing as much as a 15 gigawatt (GW) electricity shortage when demand ramps up in the summer. Supply may be increased by 5GW primarily by bringing power generating plants currently under maintenance back on line, utilizing floating barge plants, and maximizing load shifting from the eastern to western grid. Thailand, which as an aid recipient, once received Japanese power generating plants, and has now volunteered to return some of that capacity.

That leaves 10GW which will need to be addressed via conservation. Among the conservation measures under consideration by large corporations:

  • Reduction of peak load demands: scheduling more night and weekend shifts, and scheduling maintenance for the summer.
  • Staggering vacations: the Keidanren, the association of large corporations, is to coordinate a schedule by which various corporations will take vacations during different weeks in August, and shift paid holidays from non-summer to summer dates.
  • Reducing office demand: raise temperatures, reduce lighting, turn off elevators and escalators, etc.

In the financial sector:

  • Close minor bank branches, and turn off the air conditioning in remaining branches.
  • Reduce trading times at stock exchanges, or time shift to reduce air conditioning use.
  • Move headquarters activities from the damaged western grid to the unaffected eastern grid .

In the public sector:

  • Postpone energy-intensive laboratory experiments.
  • Disable half of printers, electric clocks, elevators, electric doors, etc.

While one might expect that these conservation measures could exert a drag on business activities, it is worth recalling that in the wake of the oil shocks of the 1970s, Japan undertook a concerted program of conservation, and the economy continued to grow, even as power consumption was falling in absolute terms.

In the longer-run, this experience may alter business practices, particularly in regard to supply chains. Expect higher inventory levels and diversification of supply both within and outside Japan. The latter could particularly benefit South Korea and Taiwan.

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Marcus Noland Senior Research Staff

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