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TOKYO, July 25 (Reuters) - Japanese Prime Minister Yoshihiko Noda's post-Fukushima nuclear energy policy will be on trial in a local governor's election on Sunday, where an upset victory by a renewable energy candidate would deal Noda's wobbly administration a new blow.
Energy policy has become a big headache for Noda, who is battling to hold his Democratic Party (DPJ) together ahead of a possible parliamentary election this year.
The prime minister has already suffered a series of defections over his approval of reactor restarts despite safety concerns after the 2011 Fukushima disaster, as well as his plans to double the sales tax.
The DPJ's fracturing coincides with mounting voter opposition to nuclear power, with some 100,000 people rallying against the re actor restarts i n Tokyo on July 16.
Now Tetsunari Iida, a well-known proponent of renewable energy as an alternative to nuclear, is running for governor of the western conservative stronghold of Yamaguchi prefecture. An Iida victory or close finish would add to Noda's woes.
"People are angry about conservative politics, so I am stressing a change to people-oriented politics and am getting more support," Iida told Reuters by phone from Yamaguchi.
The local poll result could influence a government decision on its medium-term energy mix programme and provide clues to the political fate of the faltering DPJ, its main rival Liberal Democratic Party (LDP) and "third force" challengers who are already positioning themselves for the next national election.
A vote for Japan's powerful lower house of parliament must be held by September 2013 and could be called sooner.
"If Yamaguchi goes against the 'nuclear village' and votes for a green candidate, it would certainly put a lot of wind in the sails of the anti-nuclear movement," said Jeffrey Kingston, director of Asia studies at Temple University's Japan campus, referring to the powerful nexus of atomic industry interests.
"A lot of politicians are very scared about the election because there is really deep anger at the two main parties. There is a lot of frustration and people are ready for change."
Demonstrations outside Noda's office in Tokyo protesting the resumption of operations at two Kansai Electric Power Co reactors in western Japan have grown week by week.
Multiple probes into the March 11, 2011 nuclear crisis, in which a huge quake-induced tsunami devastated the Fukushima plant, causing meltdowns and forcing mass evacuations, have underscored the failure by authorities and utilities to adopt strict safety steps or plan how to cope when disaster struck.
Noda is set to decide a new medium-term energy portfolio plan next month. Experts have proposed three options: zero nuclear power as soon as possible, a 15 percent atomic share of electricity by 2030, or 20-25 percent by the same date compared to almost 30 percent before the Fukushima disaster.
Under pressure from businesses worried about stable electricity supply, Noda has been thought to be leaning toward 15 percent, which would require all of Japan's 50 reactors to resume operations before gradually closing older units.
The growing anti-nuclear movement, however, may make that choice difficult -- and it would be even harder if Iida wins in Yamaguchi, said Hiroshi Takahashi, a Fujitsu Research Institute fellow and member of government advisory panels on energy.
"I predict that the Noda government will choose a 10 percent scenario," Takahashi said. "He really needs to show that he has made some kind of compromise."
Iida, 53, wants Japan to exit atomic power by 2020 and is promising to revitalise the economy of the rural prefecture with renewable energy projects.
Until recently an adviser to popular Osaka Mayor Toru Hashimoto, Iida also opposes Chugoku Electric Power Co's plan to build a nuclear plant in the town of Kaminoseki and the restarts of other reactors in nearby prefectures.
Iida's main rival is a former transport ministry official, Shigetaru Yamamoto, who is backed by the conservative opposition Liberal Democratic Party (LDP). Also running are Tsutomu Takamura, a former Democratic Party lawmaker lacking his party's full support, and a former local official, Shigeyuki Miwa.
Yamamoto was once seen as unbeatable but domestic media say he has grown cautious about the Kaminoseki nuclear project and is now touting the need for Japan to reduce dependence on atomic energy. Locals, however, still identify him as pro-nuclear.
Analysts at first gave Iida little chance of victory and point out his narrow expertise may worry local voters. But he appears to have gained support from deepening doubts about nuclear power, as well as growing opposition to the arrival on Monday of U.S. Osprey military hybrid helicopter-planes with a troubled safety record at a U.S. Marine base in the prefecture.
"There is no doubt that Yamamoto is ahead," said Takashi Yamato, whose father ran unsuccessfully for mayor of Kaminoseki on an anti-nuclear platform last year. "The situation is tough ... but my impression is Iida's support is spreading."
Editing by Michael Perry