Approximately fifteen years after the Fukushima nuclear accident, the Sanae Takaichi administration has placed the restart of nuclear power plants and the construction of next-generation reactors at the core of its policy agenda. Morgan Stanley believes the conditions are now ripe for a nuclear power revival in Japan.
According to the report, Morgan Stanley's research note dated March 29th indicates that the Takaichi government's nuclear policy focuses on two main directions: accelerating the restart of existing nuclear power plants, and promoting the development and deployment of next-generation advanced reactors.
A stable political landscape provides strong momentum for advancing this policy, with the electric power and construction sectors standing to be the most direct beneficiaries. The restart of nuclear reactors directly reduces fuel costs for thermal power generation, while major construction contractors are securing ongoing orders for associated restart projects.
A key catalyst for Hokkaido Electric Power is the restart of its Tomari Unit 3 reactor, currently projected to begin trial operations as early as July 2027. Concurrently, long-term electricity demand in the Hokkaido region has significant upside potential, driven by site selection needs for AI data centers and next-generation semiconductor factories. In the construction sector, Kajima Corporation has historically led the construction of the majority of Japan's nuclear power units, having undertaken the construction of the vast majority of the 33 operational reactors, giving it a clear first-mover advantage in technical qualifications and market positioning.
**Current Status of Japan's Nuclear Power: 33 Reactors, 14 Restarted**
Japan currently possesses 33 nuclear power reactors with a total generating capacity of 33.08 gigawatts (GW). As of December 31, 2025, the status of these reactors is as follows:
* Restarted: 14 reactors, with a total capacity of 13.25 GW. These primarily belong to Kansai Electric Power (7 reactors), Kyushu Electric Power (4 reactors), Shikoku Electric Power (1 reactor), Tohoku Electric Power (1 reactor), and Chugoku Electric Power (1 reactor). * Passed Nuclear Regulation Authority (NRA) safety screening but not yet restarted: 4 reactors, including Hokkaido Electric's Tomari Unit 3, Tokyo Electric Power's Kashiwazaki-Kariwa Units 6 and 7, and Japan Atomic Power's Tokai Daini. * Undergoing NRA safety screening: 8 reactors. * Have not yet applied for safety screening: 10 reactors.
Additionally, two reactors are currently under construction: Chugoku Electric Power's Shimane Unit 3 (ABWR, 1.37 GW) and J-Power's Ohma nuclear power plant (ABWR, 1.38 GW). Both are in the NRA review stage, with operational dates yet to be determined. In terms of nuclear power generation, output for fiscal year 2024 (ending March 2024) reached 84.1 billion kilowatt-hours (kWh), accounting for 9% of total electricity generation. This represents an approximately nine-fold increase compared to fiscal year 2014, primarily driven by the continuous increase in reactor restarts.
**Policy Framework: The Seventh Strategic Energy Plan Outlines Nuclear Vision**
The Japanese government formally issued the Seventh Strategic Energy Plan through a cabinet decision in February 2025, clarifying the direction of nuclear policy:
* Existing Nuclear Power Plants: Promote public-private cooperation to accelerate restart progress. * R&D and Deployment of Next-Generation Innovative Reactors: Construct advanced next-generation reactors on the sites of nuclear power plants where operators have decided to decommission. * Cutting-Edge Technology R&D: Advance the research and development of advanced light-water reactors, small light-water reactors, fast-breeder reactors, high-temperature gas-cooled reactors (HTGR), and nuclear fusion energy.
Regarding emission targets, Japan aims to reduce greenhouse gas emissions by 73% in fiscal year 2041 compared to fiscal year 2014. With fiscal year 2014 emissions at 1.395 billion tons, this implies a target of 377 million tons for fiscal year 2041. However, actual emissions for fiscal year 2024 remained high at 1.017 billion tons, meaning a further reduction of 63% (640 million tons) is still required from that level. For power generation targets, the Seventh Strategic Energy Plan calls for total electricity generation to increase to 1.1-1.2 trillion kWh in fiscal year 2041 (estimated at 9,854 billion kWh for fiscal year 2024), with the nuclear share needing to rise from the current approximately 8.5% to about 20%.
**The Takaichi Administration's New Nuclear Policy: Stable Government Accelerates Progress**
The Liberal Democratic Party, led by Sanae Takaichi, secured victory in the House of Representatives election on February 8, 2026. This political stability provides solid political assurance for advancing nuclear policy. In a policy speech to the Diet on February 20, 2026, Prime Minister Takaichi clearly stated:
* Ensuring domestic energy self-sufficiency. * Government and industry working together to accelerate nuclear restarts. * Promoting specific R&D and deployment plans for a new generation of reactors. * Advancing the practical application of nuclear fusion energy at the world's fastest pace.
Morgan Stanley views the NRA's recent initiation of revisions to certain review processes, such as re-examining the "five-year rule," as early signals of a directional shift in Japan's energy policy. Analysts will focus on discussions related to 17 strategic areas by the "Japan Growth Strategy Committee" established within the Cabinet Secretariat, particularly policy trends in resources, energy, GX (Green Transformation), and AI/semiconductors.
**Medium- to Long-Term Scenario Analysis for Nuclear Power: New Build Demand Could Reach 25 GW**
Scenarios for total power generation in fiscal year 2041 (ending March 2041):
* Optimistic Scenario: 1.2 trillion kWh. * Base Scenario: 1.1 trillion kWh. * Pessimistic Scenario: 1.0 trillion kWh (demand increase from AI data center construction falls below expectations).
Scenarios for required nuclear power generation in fiscal year 2041:
Calculating with an 80% nuclear capacity factor, the base scenario (nuclear share of 20%, total generation of 1.1 trillion kWh) would require nuclear power generation of 220 billion kWh in fiscal year 2041, corresponding to a required capacity of 31 GW.
Scenarios for existing nuclear capacity in fiscal year 2041:
* Optimistic Scenario: 30 GW (all 33 reactors operate for 60 years, with 29 still operational by then). * Base Scenario: 19 GW (average of optimistic and pessimistic). * Pessimistic Scenario: 9 GW (only the 8 reactors already approved for 60-year operation continue, with the remaining 25 retiring after 40 years).
Integrating these scenarios, the required additional nuclear power capacity by fiscal year 2041 ranges from 0 to 25 GW. Using the base scenario as an example (demand of 31 GW, existing 19 GW), an additional 12 GW would be needed. Assuming each new reactor has a capacity of 1 GW, this would equate to constructing 12 new reactors.
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