The second week of March 2010 saw representatives from about 60 countries gather in Paris for a meeting hosted by the International Atomic Energy Agency (IAEA) and the Organisation of Economic Cooperation and Development (OECD). The topic of the conference was access to civil nuclear energy; in other words, how can those countries which have experience and expertise in constructing and operating nuclear power plants assist those countries which wish to build their nuclear power capacity?
China took part in this conference, but it probably found itself playing two roles. On the one hand, its civil nuclear industry is twenty years old, for the first nuclear power plan came into commercial operation in 1994. On the other hand, China is building new nuclear power plants faster than any other country, and seeks international technical collaboration to achieve its ambitions for the industry.
As of March 2010, China has 11 operating nuclear power plants with a total capacity of about 8.5 GW. This places it tenth in the world ranking, behind the USA (100 GW), France (63 GW), Japan (46 GW), Russia and Germany (about 20 GW each), and Canada, Korea, the United Kingdom, Ukraine and Sweden (with 9-20 GW each). At the end of 2009, China’s total power generation capacity was about 875 GW, and so nuclear power amounted to just 1% of total capacity and about 2% of total electricity production.
This is set to change dramatically over the coming decade. The country now has 21 reactors under construction, with a total capacity of about 21 GW. Of these 21 plants, 15 were put under construction in the last two years, 2008 and 2009. Most of them are due to come into commercial operation by 2015. A further 36 plants with a total capacity of about 40 GW are being planned. Estimates of the total capacity of nuclear power generation available by 2020 range from 60GW to 80 GW, equivalent or in excess of that of France today. If the total capacity of the power sector was about 1,500 GW in 2020, then nuclear power would account for 4-5% of total capacity and about 8% of total power generation.
Draft proposals exist for a total of 150 GW of additional nuclear capacity, though many of these plans are very vague. China’s total nuclear capacity could reach as high as 160 GW by 2030. If total generating capacity had reached 2,000 GW, then nuclear would amount to about 8% of capacity and well over 10% of output.
Such rapid growth will require a complete change in the way China’s nuclear industry is run. Building on 1980s French technology, China has developed its own CPR-1000 reactors which predominate in plants currently operating and under-construction. The construction and operation of nuclear plants has been dominated by two Chinese companies: the China National Nuclear Corporation and the China Guangdong Nuclear Power Group. Though the country plans to continue with its preference for pressurised water reactors, the need to use third-generation technologies has required the involvement of foreign companies such as Toshiba/Westinghouse and Areva/EDF, as well as Russian and Canadian companies. These steps will result in the diversification of both technologies and players in China’s nuclear industry.
Diversification is also taking place in terms of domestic players and geography. The country’s major power companies are now moving into the nuclear industry for the first time. China Power Investment and Huaneng both have firm plans for new plants, whilst Guodian and Huadian are developing proposals. All the currently operating reactors are in the coastal provinces of southeastern China: Guangdong, Zhejiang and Jiangsu. Though all the plants under construction also lie along the coast, a few have more northerly locations, in Shandong and Liaoning. Those plants which are planned show a spread westwards into the central provinces of Anhui, Jiangxi, Hunan and Hubei, whilst almost every province is represented in the list of proposed projects.
Assuming that the availability of finance is not a concern, the country still faces three major challenges if these ambitions are to be realised. The first challenge is the need to scale-up the manufacture and supply of equipment and components and the supply of skilled technical staff and managers, all without compromising quality in either the construction or operation of these reactors. These are fearsome challenges in a global industry which is desperately short of skills and capacity. However, China has shown a great ability to expand industrial capacity and workforce at a rapid rate in other sectors.
The second challenge is to secure adequate supplies of uranium. In this China is taking the same approach as it follows for other energy resources. Exploration for domestic uranium resources is being expanded, imports for abroad are rising, and state-owned companies are investing in mineral resources overseas in such countries as Australia, Kazakhstan, Uzbekistan, Namibia, Niger and Mongolia. Finally, the government plans to develop a strategic uranium reserve.
The final and, in my view, most daunting challenge facing the government is to establish an effective institutional system for regulating construction standards, operations and waste management in its booming civil nuclear industry, and to achieve this in a way which retains the trust of its population in this industry.
In this column on a number of occasions I have examined the deficiencies in the institutions which govern and regulate China’s energy and natural resources sectors. The long-standing challenges facing energy sector regulation in China have their roots in the complex structures of government with its multiple layers and multiple lines of control, in the competing interests between these layers and lines, and in the weakness of the legal system.
During the early years it has been relatively easy to manage the nuclear industry because the number of reactors, the number of companies, the geographic spread of locations, and the range of technologies were all relatively small. Over the coming ten years, the scale and scope of the regulatory challenge will grow dramatically. Of greatest importance will be the growth in the number of parties with an interest in the nuclear industry; these will include Chinese and foreign companies in the supply chain, the project developers, banks, the State Grid Company, local governments and local communities, in addition to various agencies in the national government. It will also be necessary to develop China’s almost non-existent body of law relating to nuclear energy.
Two further challenges face the nuclear industry as it grows. First, the larger it becomes the less it will be blessed with special treatment with respect to access to finance and to its ability to despatch and sell its electricity. China’s electricity industry today is stranded in a partially-reformed state. The power generators are largely state-owned and wholesale power prices are set by the state. This may not be so in ten or more years time, and the new nuclear plants may be exposed to significantly greater commercial risks than they are today.
The second concern relates to the continued willingness of the Chinese people to accept the growth of the civil nuclear sector. To date I have seen no reports of protests against the construction of nuclear plants in China; this contrasts with protests against nuclear weapon tests in the past. However, local populations have and continue to voice their opposition to hydro-electric dams and to conventional thermal power plants if the project developer fails to take their interests into account. It remains to be seen whether China’s people will support the nuclear industry in the way that the French do, or whether they develop a scepticism or distrust which is found in many other countries.
Philip Andrews-Speed is Professor of Energy Policy at the Centre for Energy and Mineral Law and Policy at the University of Dundee, Scotland.
