Key Facts
• In 2025, nuclear power regained prominence amid decarbonization efforts.
• Renewable energy excluding solar and new energies faced cost pressures from global inflation and yen depreciation.
• February 2025: The 7th Basic Energy Plan emphasized “maximum utilization of nuclear power.”
• Local consent achieved for restarting existing reactors; new construction and next-gen reactors under review.
• First reactor dismantling began in decommissioning work.
• 2025 nuclear industry sentiment: “Good” rose 6 points to 15%, “Normal” 53%, “Bad” dropped 11 points to 32%.
• January 20, 2026: Tokyo Electric Power’s Kashiwazaki-Kariwa Nuclear Plant Unit 6 scheduled to restart.
• Mitsubishi Corporation and Chubu Electric subsidiaries withdrew from offshore wind projects due to soaring costs.
• Major gas companies abandoned US synthetic methane projects, shifting to lower-cost alternatives.
• Green hydrogen costs from renewable power remain a major challenge.
• ENEOS shifted from synthetic fuel using green hydrogen to bio-based fuels due to cost and supply concerns.
• Japan Energy Economics Institute forecasts 2026 inflation rate to drop from ~3% to 1.9%.
• Industry leaders call for policy support and institutional frameworks to enable projects despite cost pressures.
Summary
The year 2025 marked a pivotal shift in Japan’s energy sector, with nuclear power making a strong comeback as a key decarbonization source, supported by the 7th Basic Energy Plan and local approvals for reactor restarts and new developments. This revival improved industry sentiment to its best level in a decade. Conversely, renewable and new energy sectors, excluding solar, faced significant headwinds from global inflation, yen depreciation, and supply chain constraints, leading to project cancellations and strategic shifts, such as offshore wind project withdrawals and synthetic methane plan revisions. High costs of green hydrogen and synthetic fuels remain critical challenges, prompting companies like ENEOS to pivot toward biofuels despite concerns over food security and supply. Looking ahead to 2026, inflation is expected to ease, but ongoing cost pressures require robust policy support and institutional frameworks to sustain decarbonization efforts across all energy types.
