China Nuclear Power Strategy Analysis

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As statistics have shown, the global nuclear industry has been on a growth pattern with an over 100 percent growth in the power output since 1980. In 1980, the world’s nuclear power production stood at 684 billion kilowatt-hours, and by 2012, the global capacity was 2345 billion kilowatt-hours (World Bank, n.d). As can be seen from its overall nuclear power generation as of 2014, China has not been left behind in that growth.

China Nuclear Power Strategy Analysis

Figure 1: Map showing nuclear plants in China

Source: [WNA, 2015b]

Table 2.1 on the operational reactors shows that China’s output of the global nuclear power is at 2.4 percent with 23 operational reactors and 26 reactors under-construction reactors. China has the largest number of reactors under construction, showing its commitment to increase its nuclear output.

China’s Increasing Influence in the International Nuclear Field

China has been a country intent on developing in all aspects, whether economic, political, or social. The fight for hegemony in Asia has seen China move at a fast pace to secure its position in the international arena, and its investments beyond the country’s borders show just how focused China is. With regards to nuclear energy, not only is China having massive influence in Asia, it is extending beyond Europe and the United States. In 2013, as Britain was establishing its nuclear power plant in Southwest England, Chinese corporations were buying stakes in the power plant as ways of extending their influence beyond Asia. China National Nuclear Corp and China General Nuclear Corp purchased a stake of up to 40 percent in the plant (Davis, 2013).

UK isn’t the only country shows China’s nuclear influence in the international field. Some of the country’s corporations have supplied atomic parts in the construction of the US nuclear plants and even engaged in contractual activities in the area. China’s growth at home has made it a trustworthy partner in international co-operations regarding atomic energy. More so, china’s growing influencing can be attributed to the idiosyncrasies of its manufacturing eco-system that mostly affect supply chains in atomic power (Florian, 2012). Chinese policy on nuclear power has always focused on the importation of nuclear power as a way of going global, and this substantially influences its position in the global nuclear power.

China Has Entered the First Phalanx of the World’s Nuclear Power Development

The commitment of the Chinese in becoming a global nuclear powerhouse is evident in the construction of new reactors, and international co-operations that help the country stamp its international presence. Even as its worldwide presence and nuclear output increases, the country was not always inclined to atomic initiatives. Before the 1980s, China was opposed to any atomic engagements even when neighbours and allies seemed to be going the atomic way. China’s opening up to world markets and international organizations in the late 80s saw it slowly embrace nuclear initiatives (Horsburgh, 2015). China joined organizations involved in the regulation of nuclear energy such as the Conference on Disarmament (CD), and it was able to mimic nuclear policies from other nations. Such steps marked the beginning of china’s journey to becoming a global atomic phalanx.

Although the atomic order was more inclined towards atomic weapons and issues of disarmament, China’s entry in the order marked a change of view with regards to nuclear energy. Much of china’s electricity is produced from coal, implying that the country has high rates of pollution. In a bid to reduce carbon emissions from these fossil fuels, China began to differentiate its sources of power, and nuclear power was the best option with regards to reduction in pollution levels. Even though China had been producing nuclear energy for some time (since the 1980s), the last decade has seen increased commitment in the industry as it seeks to shut down its coal plants.

         China may be yet to achieve a nuclear boom, but it is well within reach of its goals to become the top nuclear energy exporter. As of 2015, the country is expecting to begin operations in 8 of the newly built reactors but is still seeking to double its number of operational nuclear plants (Tiezzi, 2015). Part of the rush in commissioning new atomic plants is due to the decreased investments experienced in the country in 2014 after it failed to approve any new power plant. In 2014, nuclear energy accounted for 2.4 per cent of the entire energy output in China (WNA, 2015a). The country looks to increase this output from the current 2.4 percent to 6 percent by 2020. 

With the proposed increase of nuclear production comes the need for more reactors that may n turn lead to a shortfall in labour, fuel, and equipment. For China to maintain its phalanx, it has embarked on investments in uranium mining not only in the country but also internationally. The main aim is to ensure that it continues a constant supply of fuel for the growing number of reactors in the country. Some of the uranium used in China is exported from countries such as Canada, Uzbekistan, Kazakhstan, Canada, Namibia, Niger, and Australia (Mark, 2005). The table below shows the country’s investments in international uranium sources

Table 1: Showing Chinese equity in international uranium mining

Source: [WNA, 2015a]

All the countries that China has invested in are the countries with a lot of uranium reserves in the world as Table 2.4 depicts. The investment in large uranium deposits is a sign of commitment to increasing the number of reactors in the country. By 2030, China intends to have its national nuclear power output at 129 GWe, while the US intends to have an output of 126 GWe. The implication is that China will be the leading producer of nuclear energy by 2030.

Opportunities

Opportunities Presented by the Government and Policy Support

The Chinese government has been supportive of the nuclear energy industry through policy and provision of the right regulatory environment. Local investors stand to gain from government regulations that give full ownership to three Chinese companies while other domestic and foreign companies are only allowed minority stakes (Zhou and Hinze, 2015). The three companies are the China National Nuclear Corporation (CNNC), China Power Investment Corporation (CPIC), and the China General Nuclear Power Group (CGNPG). The National Nuclear Safety Administration (NNSA) approves the participants in this industry and regulates the companies approved. The control exercised by the government through regulation is aimed at ensuring safety, especially following the Fukushima accident, and reducing leakages of resources from the sector.

Other supportive policies that provide opportunities for nuclear investments in the country regard the decreased dependency on fossil fuels. Systems seeking to reduce dependence on fossil fuels are by the high cost of producing energy from fossil fuels. A policy shift towards support for nuclear power comes amidst concern for climate change and high levels of carbon emissions coming from China. China’s State Council committed to ensuring a reduction in carbon emissions from 2005 levels by 40 percent by the year 2020. Also, the government committed to reducing fuel generation from fossils by 15 percent as of 2020. Opportunities for investors lie in investing in nuclear power production and uranium mining to support the industry.

Another government policy facilitating investment opportunities in the nuclear power sector regards the need for rapid economic growth, and a need to diversify the economy. Such a system is supportive of the nuclear energy sector as the export of nuclear energy will bring about economic development and the needed economic alternative. Nuclear power is also a cheap source of energy, considering the reduced carbon emissions.

Opportunities Presented by Technology, Experience, Management, etc

China’s technology growth is, without a doubt, one of the significant factors that place it on the global stage and aids in the development of other sectors. The increased demand for nuclear energy from the country has led to increased demand for supporting technologies that increase efficiencies while reducing operational costs and risks. The CPR-1000 reactor design is China’s development that borrows technology from France’s Avera M310. Though the CPR-1000 may be considered a Chinese model, its intellectual property rights belong to France. The further development of this sector implies that China can develop nuclear technology that it can export as its own.

As the country expands its nuclear output through the construction of new reactors, there is a need for advanced technology to support these projects. Though the state provides some of the technological facilitation, much of the technology for the reactors come from abroad. Westinghouse Corp from the US has been one company providing AP-1000 reactors to China (Ong, 2010). The opportunities evident are more investments in the technology sector for China to support its production. Hualong 1 is one of the indigenously developed reactors in China that was approved in April 2015 (Tiezzi, 2015). Categorized as a third-generation reactor, the country intends to use this technology in its Fuqing plant and also export it as part of being a leader in the nuclear energy industry. As such, economic opportunities abound in nuclear technological development.

Management and labour experience in the nuclear energy industry are in low supply in China. The increasing number of reactors implies that workers have to be distributed to facilitate operations at these new sites. The current concern is that the number of skilled labourers in the nuclear industry may not be sufficient to support the industry. Opportunities available include the development of new talents to occupy this industry. Other countries may also export their labour force to China due to the reduced labour market.

Opportunities Presented by the Strategic Position of Nuclear Power in China’s Energy Development

China is a country that has been experiencing continued economic growth, urbanization, and improved living standards for its citizens. The implication is that all these developments need energy for sustenance, and the demand for electricity is only likely to increase. Economic growth in the country has been stimulated by rapid industrialization that may account for a larger share of the energy demand.  China has been relying on coal as a source of its energy, and even though the country has 12 per cent of the world’s coal deposits, the deposits are not sufficient to support the energy demands of the 1.3 billion Chinese (Wenquan, 2009). The strategic position of nuclear power in the country’s energy development will promote increased industrialization and the further stimulation of the economy.

The imbalanced distribution of energy resources and its consumption is another factor addressed by nuclear power. While most of the coal reserves are in the north, the much-needed water resources to support coal energy production area in the southwest region of the country. Due to the imbalanced distribution of these resources, transportation costs are added to the production costs of coal, and the result is increased prices for the fuel (Damao, 2005). The strategic positioning of nuclear power in the county’s energy development provides a cheap alternative from coal and the possibility of balancing demand and supply. The possible balancing of demand and supply implies that there will be enough energy to support further industrialization, economic development, and foreign investments. The government will also collect more revenue from this sector, which means that there will be opportunities for new national events in areas such as infrastructure and national security.

Another opportunity for nuclear power development is the possibility of increasing energy output while reducing environmental impacts. The energy structure dependent on coal has had negative implications for the environment through increased carbon emissions.

Opportunities Presented by the Chinese Strategy of Going Global

The Chinese policy of going global includes the exportation of nuclear power, as well as the exportation of atomic technology. The exportation of nuclear energy depends on the country’s ability to produce enough energy that will sustain its local use while exporting the surplus. Available opportunities regard uranium mining, where other countries/investors can capitalize on exporting uranium resources to China, for purposes of supporting its burgeoning nuclear needs. Exporting countries such as Niger, Australia, and Uzbekistan stand to gain from the increased demand for uranium by China.

China’s development of its nuclear technology such as the Hualong 1 will aid in its global strategy through exportation of the technology. Currently, the country has been exporting some of its technology to Pakistan, the US, Argentina, and the UK. The export of technology will bring in additional revenue to the country, and also aid the importing countries in the development of nuclear power. In July 2014, Chinese President and Argentina’s president signed an agreement that would see China export its technology and equipment in the building of the Atucha 3 (WNA, 2015b). Such transactions place China on the global nuclear map and gains returns from such investments. The table below shows prospects and sales for China’s technology exports in different countries as of 2015.

China Nuclear Power Over the World

Table 2: Technological export sales and prospects

Source: [WNA, 2015b]

Problems and Recommendations

Existing Problems

One of the existing problems in China’s nuclear power strategy is the need to improve economics while factoring in safety measures. The scaling factor of nuclear power can only be improved through large scale deployment, but the construction of more reactors increases the risks to the population (Yuanhui, 2009). To reduce reactor construction, the only possible approach is increasing unit capacity and improving safety performance. To do so, the country has to embark on designing reactors that can fit such specifications and also meet the world standards. Although the newly developed 3rd generation may be better than the 2nd generation reactors, technology is yet to produce a risk-free system.

Another problem that China is facing in nuclear power development is the achievement of a domestic capability to design and manufacture its nuclear technology. Until the maturation of Hualong 1, China had relied on foreign technology that it has improved but is yet to gain full ownership. The challenge lies in winning the capability for internal design and manufacturing, considering that it intends to export its technology.

Decreasing uranium resources in the country pose another challenge in increasing nuclear power output. China’s domestic uranium is not enough to supply a quarter of the country’s atomic needs (Jieying, 2015). Future nuclear projects can only succeed with enough uranium resources implying that only importation can serve these needs. With adoption comes the problem of additional costs that are transferred to the costs of power output.

Construction of nuclear reactors requires substantial capital costs that are inflated by the importation of uranium and the need to impose the highest safety standards. The challenge existing is that of acquiring investments in the sector, yet the government restricts the majority stake to three local companies. Insufficient resources are part of the problem that the country has to deal with in achievement of its 2030 nuclear power goals.

Recommendations for Development

China needs to invest more in research and development that will aid in the design and manufacture of high-end nuclear technologies. Safety remains a chief concern for the production of atomic power, but research can help in identifying areas of prime concern and reduce the risks associated with nuclear power production. Improved safety features will also be a deterrence to possible natural disasters.

China has been on rapid expansion to increase its nuclear power output, but the county should slow down on the development and focus more on safety. With rapid expansion comes the increased risk of radiation and other adverse impacts in case the country experiences a natural disaster. The country will concentrate on developing the capacity of existing units, development of designs that factor in increased safety, and increased investment in safety imperatives.

Another recommendation is that the country should seek to invest in renewable energy and reduce its focus on nuclear power production. China’s increased investments in nuclear power production are partly based on the reduction of carbon emissions, but there exist other approaches to carbon reduction while having minimal risks. As compared to renewable energy sources, nuclear energy production has the highest risk factors. Also, considering that uranium deposits in the country are reducing, investing in renewable energy conserves the planet’s resources and reduces the costs of energy production.

As the number of nuclear plants in China increases, there is a need to improve on the issue of nuclear waste management. Currently, China manages its waste through storage (Kadak, 2014), but these storages are filling up. The recommendation is that China should consider recycling of its nuclear waste such as happens in France to reduce the possibility of nuclear contamination or disaster.

References
  • Damao, X. (2005). Developing nuclear power—the only path to adjust China’s energy mix. Presentation at the International Conference on China Power & Alternative Energy Summit 2005. Shanghai, China.
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  • WNA (2015). China’s nuclear fuel cycle. Retrieved on October 31, 2015 from      http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/China–Nuclear-Fuel-Cycle/
  • WNA. (2015b). Nuclear power in China. Retrieved September 01, 2015,  http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/China–Nuclear-Power/
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  • Zhou, Y., and Hinze, J. (2015). SMRS in China: An Exciting New Sector. Shanghai: Nicobar Group.

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