Chinese nuclear power, a leadership soon to be tested by markets

Chinese nuclear power, a leadership soon to be tested by markets

Lifan Li | Associate research professor, Shanghai Academy of Social Sciences
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Beijing is increasing its share of active reactors, aiming to reach 150 GW of installed capacity by 2040, even though domestic companies still suffer from an innovation and technology gap that prevents them from conquering foreign countries

At present, China's energy industry has entered a new era of structural optimization and technological upgrading. Low-carbon development and vigorous efforts to develop new sources of energy such as wind, light and nuclear have become the consensus of this industry. In the field of nuclear energy, traditional energy group have always been committed to deploying, and they either rely on the site resources to cooperate and share with nuclear power groups, or invest in new nuclear power technologies that the nuclear power group hopes to spread risks, By attempting to lead the development of energy in the area. The new released 2017 edition of the World Energy Outlook (WEO) in IEA has recorded for China's primary energy generation (hydro, nuclear, wind, photovoltaic, and other renewable energy sources) in 2015 and forecasted for 2040 are as follows:

On the whole, nuclear power is among the top three in China's energy sector. The IEA predicts that China's nuclear power generation in 2040 will be 110.2 billion kWh (11% of the total), equivalent to 287 million tons of standard oil, The proportion of a primary energy consumption in 2040 (3.797 billion tons of standard oil) is expected as highly as 8%. Therefore, China is considered to be one of the important forces in the development of nuclear power. According to the "13th Five-Year Plan" of China's Electric Power Development, the national nuclear power capacity will reach 58 million kilowatts by 2020, and the scale of under -construction will exceed 30 million kilowatts. According to the data, as of November 2017, China (excluding Taiwan) has 37 commercial nuclear power generating units and 19 nuclear power units under construction. Nuclear power installed capacity ranks fourth in the world. Its power generation exceeds Japan and it ranks among the top three in the world. The nuclear power unit under construction is ranked first in the world for many years.

A source in accelerating mode

However, the development of nuclear power in China is still in a period of development. Nuclear power is currently indispensable for the construction of China's green and low-carbon energy system. At present, the proportion of installed nuclear power and power generation in China is very low, and there is enough room for development. It is expected that after 2040, China’s installed nuclear power capacity will reach 150 GW, and its power generation ratio will account for nearly 11% of the world average, which is now quadrupling. The first civilian nuclear power was in the Soviet Union in 1954, From that on, nuclear power in developed countries developed rapidly, especially in the 1960s and 1970s. However, following the nuclear accidents in San Francisco and Chernobyl, they slowed down the development of nuclear power in the world. As the oil price climbed into the peak of more than one hundred US dollars per barrel, nuclear power development recovered again. However, the 2011 Fukushima nuclear power plant leakage incident again made the shadows reappear. Some countries and regions such as Germany and Switzerland decided to abandon nuclear power.

At present, globally, there are 448 nuclear power generating units in 31 countries, with a total installed capacity of 400 million kilowatts, accounting for about 10% of the world's electricity generation, and reached 16% at the peak. At the same time, as of July 1, 2017, the number of nuclear power plants under construction and planned to build is 59 and 160, respectively, and the market size is close to US$1.2 trillion, and China is the demander of this market.

The domestic nuclear power market, in addition to China National Nuclear Power(CNNC), China Guangdong Nuclear(CGN), State Power Investment Corporation Limited (SPIC), as majorly as the “three pillars”, the other small power generation enterprises have also laid out. It also includes Huaneng Group, Datang Group, China Huadian Group, China Three Gorges Group and CGDC. In addition, private companies have also begun to participate in the development of nuclear energy, such as the Ocean Nuclear Energy Co., Ltd., which was established in October 2017.

The main advanced technologies for nuclear energy in China came from France and Russia. On January 9, 2018, President Xi Jinping and French President Macron jointly witnessed the construction of the world's first advanced reactor technology (EPR) in Europe for the unveiling of the Taishan nuclear power project. In April 2018, the National Nuclear Safety Administration issued the first approval document for the Taishan project. On May 22-25, 2018, the inspection and inspection team of the National Nuclear Safety Administration conducted nuclear nucleation for the first criticality of Unit 1 of Taishan Nuclear Power Plant. A safety inspection confirms that the preparation before the first criticality meets the requirements. It plans to connect with the external grid in July and achieve full-power operation in the third quarter of 2018.

A leadership consolidating along the New Silk Route

With the "Belt and Road Initiative" proposed, China's nuclear power has accelerated the pace of "going out". The independent research and development of nuclear power technology based on "Hualong I" has become a national business card that is actively promoted overseas by the China's top leaders. According to the statistics of the International Atomic Energy Agency, by the year 2020, about 130 new nuclear power plants will be built worldwide, and by 2030 this figure will reach about 300 units. The countries along the “Belt and Road” and neighboring countries will account for about 80% of the newly built units.

On November 21, 2017, China National Nuclear Corporation signed the contract for the third overseas unit of “Hualong No.1”. Prior to this, “Kraon No.1” overseas first pile – Karachi nuclear power K2 project in Pakistan has completed the hoisting of the dome and entered the equipment installation. On November 16th of the same year, China General Nuclear Engineering Group China Hualong No. 1 officially entered the second stage of its design review in The Britain, the British Bradwell B project with Hualong No. 1 technology also entered the site investigation stage. It is understood that CGN has already signed nuclear power cooperation memorandums of understanding or letter of intent with counterpart companies or government authorities in more than 20 countries, including the Czech Republic, Kenya, and Thailand. CNNC and Argentina, Egypt, Saudi Arabia, Iran and other countries have made substantial progress in nuclear energy market development.

 At present, China has built a complete nuclear power industry system, with the largest nuclear equipment manufacturing capacity in the world, the world’s largest nuclear power construction capacity, and the internationally huge demand for nuclear power development. Optimistically, This is China’s nuclear power “going out”.

Different from the development of nuclear power in foreign countries, China’s nuclear power has been a process of continuous development for 30 years, and has accumulated rich experience. There have many advantages in technology, capital, cost, construction period, and policies. In some countries and regions such as Western Europe, the United States, and Japan, there are some aging power plants which need to be phased out. Some new reactors need to be established. China has the opportunity and strength to develop this market.

The Chinese nuclear power dilemma in domestic and foreign markets

However, domestically, it cannot be overlooked that China’s nuclear power development also faces many challenges, including security, economy, independent innovation, public understanding and support. The third-generation nuclear power construction generally suffers from delays in construction schedules and increases in construction costs. Moreover, economic and power supply and demand relations have entered a new normal state, and bidding for access to the Internet and limiting on-grid power consumption have reduced the number of nuclear power equipment utilization hours.

First, the difficulty of getting approval. In the field of nuclear power, since the nuclear power generation of the third generation has just approved the charging and has not yet been put into commercial operation, it has not approved new large-scale nuclear power projects for two consecutive years. Even if it is really possible to newly approve 6-8 sets of new nuclear power units by the end of the year, the three pillow nuclear power groups will also be in a state of “failure to get the market”.

Second, do not attach importance to the forecast of electricity market. Since most of the existing nuclear power plants have experienced seasonal or even year-by-year pressure reductions, the elimination of existing nuclear power capabilities has become a problem, so nuclear power companies are coordinating new decisions on nuclear power projects.

Third, cost and efficiency are not proportional. The third-generation nuclear power construction generally faces delays in construction schedules and increases in construction costs. Moreover, economic and power supply and demand relations have entered a new normal status, the bidding for access to the Internet and limiting on-grid electricity have reduced the number of nuclear power equipment utilization hours.

Fourth, nuclear energy heating is not yet mature. Due to the overall oversupply of electricity, the inadequacy of nuclear power, and difficulties in launching new nuclear power projects. As the urbanization process accelerates, the supply side cannot satisfy the demand side. In the case of intense heat sources, the elimination of coal-fired heating and restrictions on the construction of power plants has made the contradiction between supply and demand increasingly fierce. This has caused the entire heating industry to face a dilemma.

Fifth, lacking of communication skills with foreign regulatory agencies. Although China’s nuclear industry had already performed very well in the review form IAEA and WANO, But it would be very difficult to complete this independent and transparent display in a completely different context. In the past two years, the global nuclear power market is in a downturn, and China’s nuclear power is also facing an embarrassing situation of “zero approval” for new projects. At the same time, China’s nuclear power projects and equipment are “going out”. How to demonstrate the good performance and image of Chinese companies overseas is still facing great risks.

International recognition has yet to come

First, the recognition of international regulatory requirements. The nuclear power industry has particularly high technical barriers and technical requirements, and its own technical and quality requirements are high. At the same time, when it comes to going out, it needs to face other countries, such as the United Kingdom, Bulgaria, and Argentina. The requirements imposed by their respective regulatory agencies have a large gap. Second, whether nuclear energy technology is subject to foreign countries. Although Russia announced in this June that it will build three nuclear power plants in China, it will also assist China in building the fast-to-neutron demonstration reactor CFR-600. The reactor utilizes fast-neutron reactor construction technology, and its production capacity can guarantee the production of new nuclear fuel compared with thermal neutron reactors. However, if Russia rejects its beliefs, how will China's technology improve? Third, the failure to rely on the complete set of nuclear power technology and equipment with owning fully independent intellectual property rights which is exactly the main problem for China’s nuclear power going out. For example, projects in the United Kingdom, Romania, and Argentina all use foreign reactors. China companies are basically investing in capital or trying to export some equipment. They can not really participate in the entire project. Fourth, the issue of overseas development of private enterprises in nuclear power. "Ocean Energy" cannot rely on the government's infrastructure budget and cannot completely cover the needs of all new nuclear energy projects financing and upgrading of old equipment. It provides financing tools for nuclear energy projects and it is particularly important to fill gaps in the free market. Although "Ocean Energy" established its branch office in London on November 27, 2017 to start a global nuclear power investment program, the British government does not fully believe in the company. In short, nuclear energy has become the "leader" of China's new energy development, but we can wait and see how long it will take.