Asano praised the draft for clearly identifying the risks associated with nuclear investment and for positioning business environment improvement as a central policy pillar. He noted that the document explicitly addresses major challenges, including high upfront capital costs, lengthy project lead times, uncertainty in future revenues due to electricity market fluctuations, and risks related to backend fuel cycle activities and licensing procedures.
He also welcomed the inclusion of measures such as improvements to Japan’s Long-term Decarbonized Power Source Auction system, lessons learned from the Regulated Asset Base (RAB) model adopted for the Sizewell C project in the United Kingdom, potential revisions to the nuclear liability compensation framework, and efforts to facilitate local consensus-building and licensing procedures. According to Asano, these measures reflect discussions that have taken place within the subcommittee in recent years.
At the same time, he argued that the proposed measures are still insufficient to achieve the level of nuclear development envisioned in the government’s long-term energy strategy.
While recognizing the importance of exploring government-backed financing mechanisms that make use of the state’s creditworthiness, Asano cautioned that “simply increasing borrowing capacity is not enough to justify investment in nuclear power.” He described nuclear generation as “one of the largest-risk assets in Japan for power producers” under the country’s liberalized electricity market framework.
Asano pointed to the combination of enormous upfront investments exceeding one trillion yen, construction periods lasting more than a decade, and business models that generate no revenue until operations begin. He further noted that nuclear projects face additional risks stemming from regulatory changes, backend fuel cycle obligations, nuclear liability requirements, and local consent processes. “Even when compared with other industries, there are very few assets that combine such massive scale, such long time horizons, and such intertwined political, social, and technological risks,” he said.
He also stressed that the market does not adequately compensate for these risks. Because electricity is traded as a largely homogeneous commodity regardless of generation source, it is difficult for nuclear operators to reflect nuclear-specific risks in electricity prices. Although mechanisms exist to recognize the value of decarbonization and generation capacity, he argued that “the enormous risks unique to nuclear power are not fully monetized.”
As a result, Asano said, power companies have little incentive to carry such risks on their balance sheets in a competitive market environment. In many cases, he suggested, choosing not to invest in nuclear power is easier to justify to corporate boards and capital markets than proceeding with investment.
According to Asano, the core issue lies in the gap between the public benefits expected from nuclear power—including energy security, decarbonization, power system resilience, and economic security—and the extent to which those benefits are reflected in the revenues of nuclear operators.
“Nuclear power may be necessary from a public policy perspective, but it remains difficult to justify as a rational investment target for private companies. Bridging this gap is the essence of business environment reform,” he emphasized.
Asano argued that the solution is not a return to the traditional cost-of-service regulatory model. Instead, he called for a policy framework that would reposition nuclear power from being treated as a high-risk private-sector asset to being recognized as national infrastructure that contributes to energy security, decarbonization, resilience, and economic security.
He proposed that the government clearly define mechanisms under which it would assume portions of risks that exceed what private companies can reasonably bear, including risks associated with construction delays, regulatory changes, backend obligations, and nuclear liability compensation.
Concluding his remarks, Asano stressed that for large-scale and stable power sources such as nuclear energy, “the objective should not be to ask private companies to invest out of a sense of mission. Rather, it is essential to establish a system under which investment can be explained as a rational business decision.”
