A slowdown in approvals for new reactors, along with delays to foreign generation III reactor projects have both had an impact on China's new-build programme. But in spite of these growing pains, China still looks on track for over 50GWe of installed nuclear capacity by 2020. By Steve Kidd
It is now widely appreciated that China has easily the largest nuclear power construction programme in the world and is likely, eventually, to surpass both the USA and France as the country with the highest number of operating reactors. The magnitude of the programme was curtailed (sensibly) in the immediate aftermath of the Fukushima accident (see Nuclear in China - now back on track?) but with the resumption of reactor construction approvals, the target for 2020 of 58GWe of capacity seemed realistic. China has also made some moves to become a prominent player internationally, indicated by the development of the Husab uranium mine in Namibia but also interest in investing in reactor projects overseas (beyond Pakistan, which has been a client for some time). The most ambitious of the reactor projects (and also the most advanced) is the plan for Chinese companies to take up to a 40% stake in the Hinkley Point C project in the UK with EDF and other partners (see China and UK - arbiters of the future of nuclear?)
[Cartoon: The Unit by Alexey Kovynev You have a delay? Shall I tell the guys to wait?]
Nevertheless, it has become apparent that there are some new "growing pains" in the Chinese programme, which are certainly sufficient to cause one to reconsider some of the more expansive scenarios for China in the 2020s. As things stand, with 26 reactors currently under construction (out of a world total of 69), the programme is running at five to six reactors per year. In other words, similar to what France achieved in the early 1980s. Given the need for huge quantities of clean energy (dirty air in the cities has become a huge problem, that is now subject to close public scrutiny) it was seen as reasonable that this would accelerate in the 2020s to maybe 10 reactors a year and beyond. With 58GWe in 2020, this would imply Chinese nuclear capacity of somewhere in the 150-200GWe range in 2030.
This is still not impossible, but there are currently a number of separate issues bearing on today's programme that could have longer term relevance. The most obvious one is that new reactor approvals have ground to a halt. These resumed for a while after a moratorium was imposed in the immediate aftermath of Fukushima, but no new construction starts were authorised during 2014. This is despite a large number of projects pushing for final approval by the National Nuclear Safety Authority (NNSA) and the State Council (China's cabinet). It is expected that six to eight new units will be authorised during 2015, but the pause has implications for achieving the 58GWe target by 2020. It now seems almost certain that it cannot be reached.
The arithmetic is quite simple. China now has 23 reactors in operation, with generating capacity of 20.1GWe. The 26 units under construction have combined capacity of 28.5GWe. Many of these are close to completion and all should certainly be online by the end of 2020. Altogether, that would bring Chinese nuclear generating capacity up to 48.6GWe. If reactors are to be in operation by the end of 2020 and assuming that even the slowest can be built in five years, there needs to be another 10GWe under construction by the end of 2015. This looks unlikely based on the recent approval rate, so 52-54GWe now looks more probable for 2020.
Why have approvals slowed?
It is not completely clear why the approvals have slowed, but there are a number of strong possibilities. The good news is that there does not appear to be any lessening of support for nuclear at the top level in China. Statements from the President and Prime Minister remain positive, with nuclear (along with the world's biggest renewables programme) named as key to achieving much cleaner air in the cities. The State Council published the Energy Development Strategy Action Plan, 2014-2020 in November 2014, which aims to cut China's reliance on coal and promote the use of clean energy. In December 2014, there was also a joint accord signed by the USA and China on curbing carbon emissions, indicating for the first time that China is taking its responsibility as the world's biggest carbon emitter more seriously.
Additional caution from authorities
The slowdown in approvals is most likely explained by increased caution from the authorities. This may be characterised as a second stage of the slowing of the programme, post Fukushima. The cause is two decisions: to authorise only reactors that are up to "Generation III safety standards"; and to delay approvals of inland projects. This does beg the question of what precisely is meant by Generation III, which is terminology in common use today but without clear definition. Certainly the NNSA is very busy and clearly finds it hard to keep on top of the variety of reactor designs that are coming before it. This has always been a possible pressure point in the Chinese programme and now seems to be an important factor. The government is aware of the very negative consequences of any safety incident at a Chinese nuclear station, and is likely to urge caution rather than rushing to achieve targets.
Delays to Gen III projects
Another important factor is undoubtedly the delays that are being experienced with the foreign Generation III reactor projects being built in China, the AP1000 and the EPR. The initial Chinese AP1000, Sanmen 1, is now likely to come online during 2016, over two years later than originally scheduled. Similarly, Taishan 1, the first Chinese EPR, will also likely enter service in 2016, again over two years behind the original plan. In both cases, there have been issues with the delivery of key components, while project management (and no doubt the commissioning) of new reactor types is undoubtedly challenging. In both cases, these will be the initial units worldwide. One important issue with the delays is that costs have escalated, so these reactors may have an overnight capital cost of around $3,500 per kW installed, as opposed to around $2,000 per kW for the CPR1000s (the main reactor design currently under construction). The higher costs can be ascribed to the delays but, more importantly, the lower local content on the initial Generation III units. China can build the CPR1000s with 80% plus local content, but it will take several years for this to be achieved with the AP1000. There are technology transfer agreements in place for key components but it was always going to take time for local companies to achieve the required quality and volumes.
It is apparent, however, that the delays on the AP1000 have important implications for the future Chinese programme. It is generally expected that two more EPRs will be ordered for Taishan, but that they will be the last in China. When Westinghouse's offer of the AP1000 was accepted by China and it began working with the State Nuclear Power Technology Corporation (SNPTC), it was expected that most future Chinese reactors would be AP1000s (designated CAP1000 when high local content was achieved). It seems that the authorities are now loath to authorise any further AP1000 construction starts until the first of the Sanmen units is in operation (or at least much closer to this than today). The curtailment of inland site development was one blow (nearly all of these were planned to host AP1000s) but the construction delays seem to have imposed a second.
The arrival of a new Chinese reactor design
The other "joker in the pack" is the arrival of the Hualong design. This is a joint China National Nuclear Corporation (CNNC) and China General Nuclear (CGN) project, developed from each company's experience with the previously imported French technology (ultimately their ACP1000 and ACPR1000 designs). The Hualong ("dragon" in Chinese) has now been approved as Generation III standard by the NNSA and is therefore set to get some of the construction approvals this year, likely to be Fuqing 5 and 6 for CNNC and Fangshenggang 3 and 4 for CGN. Where the Hualong stands in relation to the AP1000 for the future Chinese programme remains to be seen, but it can apparently be built with high (maybe even 80%) local content from the start, which is attractive economically.
There is a standard price for nuclear power granted by the two Chinese grid companies of 0.43 RMB per kWh. The owner-operators of the initial AP1000s and the EPRs will no doubt be seeking an increment above this level but this is not something that will likely be granted longer term. Assuming there are no technical issues standing in the way, the AP1000 must be able to compete with the Hualong on economic grounds. Given the relative simplicity of the AP1000 design, which has a large element of passive safety, saving on large numbers of pumps and valves, this should certainly be possible once series construction and high local content is achieved.
Uncertainty over structure of Chinese nuclear industry
Another factor which may be relevant in the slowdown of approvals is the apparent uncertainties over the structure of the Chinese nuclear industry. There has been talk of possible mergers between the major groups and a degree of in-fighting between the various interests. It is difficult for outsiders to understand where real power lies but semi-retired senior politicians have been lining up behind each major company.
The recently-approved merger, between SNPTC and the China Power Investment Corporation (CPI) would seem to make some logical sense, marrying a reactor technology company and vendor with an operator. CPI's first reactor as an operator (as opposed to merely an investor) will be the second AP1000, Haiyang 1. One positive feature has been the flotation of CGN Power on the Hong Kong Stock Exchange in December 2014. This was a big success, raising additional funding away from the Chinese state banks and positioning CGN as a serious industrial corporation in China and overseas. Further stock market flotations of Chinese nuclear-related companies will no doubt follow, including reactor operators such as CNNC Power (aiming at the Shanghai Stock Exchange in 2015) and major suppliers such as Dongfang and Shanghai Electric.
Are these "growing pains" serious the Chinese nuclear industry?
On the assumption that the approval process for new construction recommences soon, arguably not too much. It is clearly very important that the AP1000s and EPRs go into commercial operation as soon as possible, as some confidence has undoubtedly been lost at high political levels by the delays. The new five-year plan (the 13th, 2016-2020), out in March 2016, may give some indication of the latest thinking on nuclear. For one thing, it will be important to authorise some inland sites during this period, as the programme depends on having them by then to maintain momentum. A huge number of sites, located in almost every Chinese province, have been designated for nuclear plants, and a significant amount of initial work has been carried out at several of them. One negative conclusion that some people could draw from the moratorium on inland sites is that there are significant safety issues. While a few (notably in Sichuan province) have greater seismic issues than the coastal sites, the remainder have none. Many may need cooling towers to maintain water temperatures at permitted levels, which is an economic issue, but the French and US programmes are largely founded on inland sites even though both countries have long coastlines. It is clear, however, that local public opinion will need handling carefully at the inland sites. The last thing the Beijing authorities want to do is provoke any issue which brings Chinese people to the streets.
Looking at the 2020s, a country the size of China can undoubtedly handle a nuclear reactor programme of 10 reactors per year, assuming the proper foundations are laid down in the period before. China can be viewed more as a continent rather than a country, where individual provinces have a lot of political power and populations similar to the larger Western European countries. But the central national regulator must have the confidence of political leaders and public opinion must be kept onside. The latter was never thought all that important in China, but today it clearly is.
About the author
Steve Kidd is an independent nuclear consultant and economist with East Cliff Consulting. The first half of his career was spent as an industrial economist within British industry, followed by nearly 18 years in senior positions at the World Nuclear Association and its predecessor organisation, the Uranium Institute.