- October 30, 2017 Energy
In the wake of Japan’s Fukushima nuclear disaster in 2011, many anticipated that a prolonged chill would sweep over the global nuclear power industry. That expectation was reinforced when nuclear power plant construction in China, which at the time had by far the most ambitious nuclear expansion plan in the world, came to a screeching halt. In response to Fukushima, Beijing ordered a safety review before existing construction and approval for new plants could resume. It even modestly pared back the number of nuclear power plants it intended to build under the five-year plan.
Since Fukushima, the Japanese government has pivoted dramatically from nuclear to natural gas. It remains unclear whether nuclear power will reprise the central role it once played in meeting Japan’s energy needs. In China, however, the setback was temporary, as the government soon decided to push forward with its nuclear power strategy. The pace of construction is a bit slower than it once was, but China today nonetheless constitutes the largest nuclear market in the world, with nearly as many plants under construction as the next four markets combined (see Figure 1). Given the size of its market, at this rate China could well set the industry and technology standards on nuclear power, especially as it eagerly eyes the export market.
Unpacking how nuclear power fits into China’s current energy plans will be my last piece—at least for a while—in a series that has examined key aspects of the country’s energy mix (you can find the other pieces that deal with coal, natural gas, renewables, and oil, here, here, here, and here). I hoped to provide a rather holistic portrait of China’s energy landscape today, and nuclear power is an important part of China’s transition from coal (I’ve deliberately left out hydro power because it’s a sector that has seen little change).
Figure 1. Nuclear Reactors Under Construction Globally
Sources: IAEA; GF Securities Research Center.
Tech Transfer: Digest, Tinker, and Repeat
Dominated by a few state giants, China’s civilian nuclear industry is relatively mature, having begun back in the 1970s. But over the last decade or so policymakers have been pushing the rapid expansion of the sector, a decision that resulted from a combination of acquiring leading new-generation reactor technology, improving the pace of plant construction, and having to meet the pressures of achieving environmental and climate change mandates. So nuclear power became more economical and was touted as the clean source of energy that could help meet carbon reduction goals. It is also considered a baseload power source that isn’t prone to the intermittency problems that beset wind and solar.
The debates over nuclear power strategy in many ways mirrored those on the high-speed rail project, which boiled down to one of speed and scale versus safety. Like high-speed rail, Chinese policymakers wrangled over the balance between relying on indigenous technology and buying foreign technology. In the case of bullet trains, Beijing ended up forming numerous joint ventures and signing technology transfer agreements with the likes of Canada’s Bombardier, France’s Alstom, and Japan’s Kawasaki. The imported technology, having been digested and mastered, is now on display in the world’s largest bullet train network—and one that was completed in a very short period of time. That haste, unfortunately, also led to the tragic train crash in 2011 that stained the final year of the Hu Jintao and Wen Jiabao administration.
In terms of nuclear power, China had relied on old Russian and French reactor designs to build its first- and second-generation reactors, but by the 2000s they were aging. In their pursuit for more advanced third-generation reactor technology, state nuclear companies had differences of opinion—China National Nuclear Corporation, for instance, preferred to develop indigenous technology, while the smaller and more nimble State Nuclear Power Technology Corporation (SNPTC) wanted to go with foreign technology.
The impasse was eventually broken in 2004 when the Chinese government opened bidding for foreign technology, and France’s Areva and America’s Westinghouse made it onto the short list of technologies that China favored. After nearly two years of expert review and lobbying from SNPTC, who preferred Westinghouse, a tech transfer agreement was signed to build Westinghouse-designed AP1000 reactors. These are pressurized water reactors that have a passive safety technology—meaning the reactor can cool on its own without human intervention for a period of time and therefore are better able to prevent meltdowns.
In addition to Westinghouse’s superior cooling technology, the plant design is more modular, cutting down on construction time and making it easier to develop localized supply chains. One of the keys to the indigenization of technology standards is to develop a network of local suppliers that will manufacture based on predetermined standards, which, over time, raises the cost of moving to another standard.
By the time the 12th Five-Year Plan rolled around in 2011, China had already absorbed and learned how to build the new-generation technology for a few years. This, combined with the fact that just two years earlier in 2009, the Hu government pledged to reduce China’s carbon emissions by 40-45% by 2020 breathed new life into the nuclear industry. The government subsequently decided to aggressively push nuclear power as a reliable renewable energy source.
A vocal proponent of nuclear power at the time was the National Energy Administration (NEA), which under Zhang Guobao, then the NEA’s administrator, proposed nuclear power installation targets that were astronomical. Back then, there were drafts floating around that planned for 86GW of nuclear power by 2020, when total installed capacity in 2010 was only about 10GW. Zhang even once said he was “anxious” about the slow pace of nuclear power development in China since it only made up 2% of total installed power capacity, far below that of developed countries like the United States.
As of 2016, nuclear power is still a small part of China’s overall energy mix, contributing to just 3.5% of electricity generation (see Figure 2). Other renewable energy sources such as solar and wind have sprinted past nuclear in recent years on the back of sizable subsidies. They also have the additional advantages of being much cheaper to build, and much safer to operate.
Figure 2. Electricity Generation by Source, 2016
Source: China Nuclear Power Industry Association.
Refocusing on safety and technology
Part of the reason solar and wind have surpassed nuclear is because in the post-Fukushima world, China began singing a different tune on nuclear power, perhaps chastened by the “full speed ahead” mentality that led to the bullet train accident in 2011. What’s more, the nuclear industry had also lost its champion in Zhang, who had stepped down as head of the NEA. The shifting strategy is clearly laid out in NEA’s explanation of the 13th Five-Year Plan on Energy, which places less emphasis on adding installed capacity, shifting instead to focus on safety, indigenizing technology, and exports.
That doesn’t mean China’s nuclear renaissance is ending. The revised 2020 target of 58GW of installed nuclear capacity is probably easier to achieve, but remains ambitious by any standard. In fact, as of 2016, China had 35 reactor units in operation and another 20 units in various stages of construction, virtually all along the coast since siting plants inland remains controversial and is riskier (see Map). If all the units are completed and come online as scheduled, China should more or less meet its 2020 target.
Geographic Distribution of China’s Nuclear Reactors
Note: Shidao Bay and Bohai Shipyard are demonstration projects of new technology.
Sources: World Nuclear Association; China Nuclear Industry Association.
Even so, despite the lower target, some in China still consider the current pace of buildout “insane.” That concern for safety over speed is certainly legitimate, since all major nuclear power countries, including France, Russia, Japan, and the United States, have had serious accidents. The problem isn’t so much technology, as most experts who have worked with Chinese nuclear companies agree that they are building plants according to global best practices and understand the technology. Moreover, the next-generation plants—such as the AP1000—have advanced features that should make them even safer from a technical standpoint.
The main issue these days has to do with people—that is, will China have enough properly trained management and technical personnel to operate and maintain the vast number of plants expected to come online over the next few years? The last thing the government wants is having a bunch of Chinese “Homer Simpsons” operating nuclear power plants. And a reported cover-up of a technical failure at a Guangdong nuclear plant in 2015 highlights how personnel shortages could compromise safety.
At a minimum, the Chinese government is well aware of the problem and has been transparent in trying to address it. In China’s 2013 review report submitted to the International Atomic Energy Agency, it had this to say:
“The Chinese government is actively preparing talents education and cultivation plan to meet the increasing demand for human resources of nuclear power in China. The state, enterprises and academies of science of colleges and universities vigorously strengthen talents cultivation and increase input for talent reserve in terms of science research, design, fuel, manufacture, operation, maintenance, etc. as well as nuclear power design, nuclear engineering technology, nuclear reactor project, nuclear and radiation safety, operation management and other professional fields.”
A demonstrated record of uncompromising safety also matters greatly as China envisions a future in which its nuclear industry becomes a major exporter, particularly in connection with the “One Belt, One Road” project. China has made strides on the technology indigenization front, having started to roll out domestically designed reactors, such as the CAP1400, which is essentially a tweaked version of imported technology. The same is true for the supply chain that produces components for China’s nuclear plants, with some of the new reactors under construction reportedly sourcing 90% of their parts locally. And that’s how standards are set, one local supplier at a time.
Ultimately, the scope and pace of its nuclear plants expansion, its ownership of leading technology, and its ability to dominate supply chains and set technical standards all make China poised to achieve its export ambitions.
Once China’s nuclear companies have mastered next-generation technology and can assure foreign buyers of the safety of its products, it doesn’t take a leap of imagination to see the Chinese premier, on his numerous foreign junkets, touting the fact that China is no longer exporting pollution but exporting clean energy to global markets.
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