The Asia Report is supported by Cathay Pacific
If you think the summer heat and demand for electric power is going to crush the Japanese economy, think again, according to Societe Generale’s Takuji Okubo.
Okubo says many naysayers are betting on what TEPCO has told them, that Japan will have a 8,500 MW shortfall in electricity production this summer, and that its going to force the shutdown of plants across the country. The impact of such a shutdown would be particularly bad for industries like semi-conductors and pharma, because they need constant electrical supply to function.
But Okubu disagrees, believes we’re going to see a V-shaped recovery in Japan, and that they’re going to find the supply they need as they’ve done before.
In our main scenario, we are assuming large scale commercial users to be able to save 2,037 MW off their usual peak usage in summer and large scale industrial users to be able to save 2,600MW. We actually have a recent historical precedent for their power saving efforts. In 2007, TEPCO experienced a power shortage problem of a smaller scale and negotiated a power saving plan with large scale users. At the time, large scale users were able to save 3,100 MW. On the power supply side, our main scenario is not assuming any extra addition to power, while in our optimistic scenario we are assuming extra 9,600MW supply to be added. As a result, in our main scenario, we expect power saving effort to generate in total 9,329MW saving, exceeding 8,500MW gap.