Supply Chain

China has officially announced that it intends to raise nuclear to 15% of its energy mix by 2020. This is a substantial rise on previous estimates and will involve the construction of a large number of additional power stations – across the country.

By Paul French, Shanghai

China has officially announced that it intends to raise nuclear to 15% of its energy mix by 2020.

This is a substantial rise on previous estimates and will involve the construction of a large number of additional power stations – across the country.

To date, China’s civilian nuclear power facilities have tended to be concentrated in the southern portion of the country, primarily around the manufacturing area of Guangdong Province close to the border with Hong Kong.

While most of China’s electricity generation is coal fired (approximately 80% at present), the coal tends to be in the north of the country which is where, traditionally, China’s heavy industry has also been located.

With the launch of the Reform and Opening Up Movement in the 1980s, southern China emerged as a manufacturing zone (principallyfor exports) while the heavy industry base in the north stagnated somewhat.

The south was short of power, the coal was in the north and so nuclear capacity was mostly developed down south.

While demand for power has grown most rapidly in the south of the country, China has faced unpredictable and surging coal prices which have particularly hampered operations in the country’s traditionally rather inefficient coal fired power plants.

Rising coal prices have long been a headache for China’s power producers and the government has had to enforce controls on power prices to prevent power generators from passing on the rising costs to power users.

Nuclear to break coal reliance

The Beijing government sees nuclear as not simply an additional source of power but also a way to reduce its current reliance on coal (and all the problems that has long entailed both environmentally and in terms of pricing stability) over the longer term.

Therefore, as well as additional nuclear capacity in the south of the country, China is ramping up its nuclear capacity in the north too now.

Foreign companies leading nuclear new build

Foreign companies so far seem to be first in line to benefit for any new contracts.

But generally involving those foreign companies already operating in China’s nuclear sector.

Primary among these is France’s EDF, which has now been involved in China’s nuclear power sector for a number of years following the eight-billion euro agreement between Paris and Beijing in 2007 that allowed for EDF to supply two reactors to the Taishan project in southern Guangdong province.

The reactors will use European pressurised reactor technology from France and have a capacity of 1,700 mW each.

According to EDF, the first reactor at Taishan is scheduled to be completed by the end of 2013, with the second one likely to be operational in mid-2014.

After supplying the reactors, EDF is currently in the process of forming a joint venture with China Guangdong Nuclear Power Group, which gives them the opportunity to operate in Taishan – an extension of the construction contract.

Aside from its nuclear interests, EDF is also involved in wind power projects across China, three thermal power projects as well as a number of traditional coal-fired power stations.

At present, EDF appears to be the best placed to gain more contracts in China – the company has long positioned itself as a “long-term industry partner in the country” across various energy sectors.

However, others are also competitive and will hope to gain more contracts as China finalises the details of its nuclear expansion.

Westinghouse has four Westinghouse AP1000(TM) nuclear power plants under contract in China (the first of these contracts also signed back in 2007), with the first scheduled to become operational in 2013.

New players boost competition

There are also a number of new players aiming to enter the Chinese nuclear sector.

Primary among these is America’s Progress Energy, which is planning to build two new nuclear plants by 2019.

Progress recently agreed to share information with Shandong Nuclear Power Company in northern China, a unit of China Power Investment Corporation.

Shandong Nuclear, which signed contracts with a Westinghouse/Shaw consortium for two AP1000 units back in July 2007, has already started construction on one of the Westinghouse AP1000 reactors.

This reactor is said to be a type similar to one Progress also plans to build.

Like EDF, Progress is hoping to expand the contract from construction to operation and share their expertise in safely operating nuclear plants with Shandong Nuclear Power. Progress is hoping, in part, to raise capital in China itself to fund the construction of the plants.

Beijing widens contractor net

Beijing is yet to announce the full details of the bidding process for the new nuclear plants, or even how many will finally be commissioned.

However, the government has stated that all the new stations will be low carbon emission plants.

Traditionally, China prefers foreign partners it has worked with previously and has a successful track record.

This would indicate that firms like EDF and Westinghouse have an inside track though the scale of China’s ambitions mean that there will potentially be opportunities for a far wider range of contractors than previously.