Japan study boosts nuclear power's cost estimates - Reuters

* Japan govt working on post-Fukushima energy policy

* Govt data in 2004 shows atomic power costs at 5-6 yen/kwh

* Govt prepares new cost assessment for nuclear power

By Risa Maeda

TOKYO, Sept 1 (Reuters) - The cost of generating nuclear power in Japan is one-third higher than Tokyo's last cost assessment in 2004 and 50 percent higher if compensation costs for the recent nuclear crisis are included, but still cheaper than fossil fuels, a study showed this week.

The study by the country's top energy research firm could provide fodder for both sides of Japan's nuclear power debate, which is expected to heat up amid public wariness over nuclear safety despite the prospect of protracted power shortages.

Lawmakers and officials are working to come up with a new energy policy after the Fukushima radiation crisis made it difficult, if not impossible, to build more reactors in the world's third-biggest nuclear generator.

Prior to the crisis, as part of its effort to fight climate change, Japan planned to boost nuclear capacity to meet over half of electricity demand by 2030 by building 13 more reactors.

Underlining the pre-disaster reliance on nuclear, a government panel's assessment of the cost of hydro, fossil fuel and nuclear power generation in 2004 concluded atomic power at 5 to 6 yen per kwh would be the cheapest energy option most of the time.

Japan had used the seven-year old data until the March 11 disaster and is now preparing to make a new assessment to gauge how to retreat from nuclear power in the long run while ensuring safety of the existing reactors.

The Institute of Energy Economics for Japan study showed nuclear power generation cost 7.2 yen (9.4 cents) per kilowatt hour (kwh) on average in the past five years. But the price would rise further if future payments for nuclear waste storage and compensation for a radiation accident are included.

If compensation for the loss and damages from a nuclear accident of 10 trillion yen ($131 billion) or more is included, the cost of nuclear power would climb about 1.3 yen per kwh, the researchers said.

Power generation from fossil fuels during the same period cost 10.2 yen on average and that from renewable energy sources, mainly geothermal power, cost 8.9 yen, according to the study based on financial reports in the five years to March 2011 by Japan's 12 major utilities.

The study also showed the cost of nuclear power has been quite stable over the five years, but the cost of power from burning fossil fuels has varied from 9 to 12 yen, depending on import costs.

The study included the cost of capital procured by utilities to manage the back end of the nuclear fuel cycle and to abolish reactors in the future, but did not include spending by utilities to support communities hosting nuclear power plants or spending for research and development.

The cost for each renewable energy type is unavailable as sources other than geothermal account for only a fraction of the total generation capacity of the 12 utilities surveyed.

Currently, home owners are the main solar power generators in Japan. Wind farms here are mostly run by specialised developers and municipal governments. ($1 = 76.470 Japanese Yen) (Reporting by Risa Maeda; Editing by Edmund Klamann and Edwina Gibbs)

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