Japan and South Korea accelerate nuclear growth
The Middle East conflict is reinforcing energy security as a central pillar of power planning in Japan and South Korea. While both Japanese and South Korean energy markets remain relatively insulated from immediate fuel supply disruption, the current conflict in the Middle East is accelerating structural shifts toward nuclear expansion. Unlike many Asia-Pacific markets, Japan and South Korea face manageable near-term risk from potential LNG supply disruption through the Qatar–UAE corridor. According to Wood Mackenzie, Japan’s direct exposure to the disruption is about 6%, compared with about 15% for South Korea.In Japan, fuel cost pass-through is delayed by around three to six months due to bilateral pricing mechanisms. In South Korea, the cost-based power pool and retail tariff caps help limit short-term volatility, although this places additional financial strain on Korea Electric Power Corporation (KEPCO).Wood Mackenzie Asia Pacific power and renewables research principal analyst Xiaonan Feng says diversified procurement and long-term contracts provide Japan and South Korea with multiple layers of protection, delaying the impact of fuel price volatility on power end users. “However, the broader policy implications of the crisis are likely to be long-lasting,” she said. Coal generation currently provides a significant near-term buffer, with coal fleets expected to offset up to 70% of gas-fired generation in Japan and more than 100% in South Korea of the same season last year, according to new analysis from Wood Mackenzie.Japan’s position is further supported by the restart of five nuclear reactors since 2022, adding 4.6 GW of baseload capacity that is insulated from fossil fuel price volatility.In Japan, the transition from post-Fukushima nuclear minimisation to expansion is now firmly established, making nuclear power an essential for long-term energy security.In South Korea, nuclear power continues to gain policy and public support, with the South Korean Government identifying nuclear as critical to meeting future electricity demand, with the potential for additional capacity beyond current plans. Decisions on lifetime extensions for about 7.8GW of reactors due to reach design limits by 2030 will be key to the country’s energy mix, according to Wood Mackenzie.At the same time, both markets are increasingly prioritising domestic supply chains within their energy transition strategies.Japan is reassessing its reliance on imported solar panels while focusing on next-generation technologies such as perovskite cells and expanding offshore wind capacity. South Korea has already moved to favour domestically manufactured equipment in recent offshore wind and battery storage auctions, signalling a shift toward localisation over lowest-cost deployment.According to Wood Mackenzie, the extent of market impact will depend on the duration of the conflict. “The immediate risks are manageable, but the long-term direction is clear,” Ms Feng said. “Energy security considerations will continue to accelerate nuclear expansion, delay coal retirements and drive greater emphasis on domestic energy supply chains in both markets.”
