The United Kingdom government’s decision in September 2016 to give final approval for Hinkley Point C nuclear power plant gives a boost not only to the future of nuclear energy in the UK, but also to China’s ambitions of becoming a major exporter of nuclear technology. China is due to take a 33.5% share of the project through one of its main nuclear energy companies, China General Nuclear Corporation (CGN). Whilst the technology belongs to France’s EDF through its EPR design, the Hinkley Point plant is an important first step for China in the UK on the way to constructing of a plant of purely Chinese design, the Hualong One, at Bradwell.
Nuclear power forms an important component of China’s energy and industrial strategies. As of August 2016, China has 34 nuclear reactors in operation, totalling 30 GW. Plants under construction will raise aggregate capacity to about 60 GW by 2020, and the target for the year 2030 is 150 GW.
Alongside these ambitious plans for domestic generating capacity, Chinese companies have recently started to look abroad for opportunities to invest in new nuclear build, either in partnership with established suppliers or on their own account. In this, they are following the example of other Chinese energy companies such as the national oil companies which have been investing overseas for more than 20 years, as well as the State Grid Corporation and renewable energy companies.
China has substantial expertise in nuclear technology. Not only did the country become a nuclear weapon state in 1964, but it is has been building nuclear power plants for more than 25 years. Over this latter period, Chinese companies have developed their own expertise in the design, manufacturing, and construction of nuclear reactors, as well as acquiring the intellectual property rights to key foreign technologies.
These companies are now among the pioneers in developing third generation reactors such as the Hualong One (HPR1000), as well as small modular reactors, floating plants, and high temperature gas-cooled reactors (HTRs). There are four main types of reactor currently intended for exports: the CNP-300 based on French technology that was introduced to China in 1990s; the Canadian Candu 6 design which was first deployed in China in 2002; the Hualong One; and another third generation design, the CAP1400, which is being developed in partnership with Westinghouse.
China’s nuclear energy industry is dominated by two companies: China National Nuclear Corporation (CNNC) and China General Nuclear Power Group (CGN), each operating about half of the country’s nuclear reactors.
CNNC is the largest of these two companies. It was established in 1988 and spans the full supply chain from uranium mining and fuel fabrication, through reactor design, construction and operation, to reprocessing and waste disposal, including research and development at all these stages. CNNC is a wholly state-owned corporation with many subsidiaries, one of which, CNNC International, is listed in Hong Kong. The company has been deeply involved in developing indigenous expertise and technologies, and the CNP-300 and Candu 6 are among the designs planned for export.
CGN used to be known as the China Guangdong Nuclear Power Group, for it began life on Guangdong Province with the construction of the country’s first commercial reactor, Daya Bay, commissioned in 1994. Like CNNC, CGN is a state-owned company with many subsidiaries, but is focused on power generation, rather than the far ends of the supply chain. In 2014, it raised US$ 3.3 billion through an initial public offering on the Hong Kong and Shanghai stock exchanges. The company has progressively developed the French M310 design that was used at Daya Bay to develop and deploy the CPR-1000 in several locations across China. Its current export strategy is largely based on the Hualong One design, the outcome of cooperation between CNNC and CGN.
Two other companies are seeking export opportunities. The State Nuclear Power Technology Corporation (SNPTC) was established in 2004 to play a role in technology selection. Since July 2015, SNPTC has been a subsidiary of the State Power Investment Corporation and now manages the nuclear power assets originally owned by China Power International. These are mainly the Westinghouse AP1000 design. In cooperation with Westinghouse and the China Huaneng Group, SNPTC has developed the third generation CAP1400 which is intended for export. The China Nuclear Engineering and Construction Group (CNEC) is focused mainly on the construction of nuclear reactors, but has teamed up with the Huaneng Group to develop and export HTRs.
The Chinese companies are targeting many countries, but the only place where construction has started is Pakistan. Here CNNC is building two CNP-300 reactors alongside two earlier Chinese units, and construction has begun of one Hualong One reactor. Firm agreements appear to have been reached in Romania and Argentina by CGN and CNNC respectively, involving the Candu 6 design and also, in Argentina, the Hualong One. In the United Kingdom, CGN is a partner with EDF in the Hinkley Point project, involving the French generation III EPR design. It also hopes to follow up with a Hualong One reactor at Bradwell. Other countries where negotiations have been carried out include Iran and Turkey where agreements have been concluded, as well as South Africa, Kenya, Egypt and Sudan.
A number of factors favour China’s planned export of nuclear energy technology. Most important of these is the high priority that the government places on the export of energy technologies, as has been seen in the power grid, wind and solar PV industries. This backing takes the form of funding from state-owned banks and diplomacy, in addition to the decades of support for the development of what is now the world’s largest nuclear energy industry in terms of active construction. As a result, China’s nuclear industry now has a large and skilled workforce that spans the full supply chain. In these respects, China’s nuclear industry possesses many advantages over its competitors from Russia, Korea, Japan, the USA and France. Finally, according to official sources, no Chinese nuclear energy facility has experienced a serious incident.
Set against these advantages are two issues, safety and finance, that beset all nuclear energy strategies. Aside from the ongoing debate over the safety of nuclear reactors in general, China is open to specific criticism on account of the speed with which new capacity is being constructed at home and the lack of transparency and apparent inadequacy of the state regulatory apparatus. This raises justifiable concerns over the safety standards that will be applied to the construction and operation of reactors in countries with little or no experience of nuclear energy.
In relation to finance, it has been assumed that Chinese plants will be cheaper than those from its competitors and that the electricity generated will be economically viable. This may be the case for the older, proven designs, but has yet to be demonstrated for the third generation designs such as the Hualong One.
Whilst many advanced economies are spurning nuclear energy, China is in a strong position to assist emerging economies boost their generating capacity with this technology. The availability of diplomatic and financial support will give Chinese companies advantages over other exporters, including the state-owned companies from Russia and South Korea.