Future of Nuclear Energy in Emerging Markets: China


This story is part of an ongoing Forum on Energy series on nuclear energy in emerging markets across the globe. See more entries here.

 

ChinaMAPThe rapid economic development in China is notable for its sheer scale. With a population of 1.3 billion people, China — the most populous nation on Earth — has increased its energy consumption at an unprecedented clip. By the end of 2012, China’s installed generating capacity was 1145 GWe — a 19 percent increase since 2010.

China’s rapid rise has been powered by fossil fuels, namely coal, an abundant domestic resource. In 2011, 68 percent of all energy consumed in China was generated using coal. However, concerns about air pollution caused by coal burning have caused Chinese Premier Li Keqiang to declare a “war on smog” and heavily invest in the development of clean and renewable energy sources — including nuclear energy.

While China currently derives 2 percent of its energy capacity from nuclear energy sources, it is currently the largest investor in nuclear energy in the world. Forty percent of all nuclear reactor construction in the world is in China, and China’s National Energy Administration has declared that China will make nuclear energy the foundation of its power-generation system in the next “10 to 20 years.” Twenty-one nuclear power facilities currently operate in China and 28 are currently under construction. In a white paper published in October 2012, the Chinese government declared that it expects to reach 40 GWe of nuclear generating capacity by 2015, and the International Atomic Energy Agency (IAEA) predicts that China will generate 19 percent of the world’s nuclear energy by 2035.

History

During the second half of the 20th century, a powerful central government controlled the Chinese economy and was largely closed to foreign companies, individuals and nation states. Along with most major industries, Chinese utilities were nationalized. Starting in 1978, a series of economic reforms opened the Chinese economy to private industry and foreign investment, but the country’s history of nationalized industries still influences today’s nuclear energy market.

Economic reforms fueled China’s economic growth and provided the government with the money needed to invest in major projects, such as the development of the nuclear energy industry. The Chinese government has relied upon French, Canadian and Russian technology to develop the nuclear energy industry, with French technology serving as the basis for native technology research and development. Today, China is determined to become an exporter of nuclear energy technology, and is actively working to develop and export Chinese-made CAP1400 reactors.

While the 2011 Fukushima accident caused the Chinese government to temporarily suspend the approval of new nuclear energy facilities, China’s State Energy Commission announced in April 2013 that the country would expedite the approval process for new nuclear reactors in China.

Current State of Nuclear Energy in China

Today, national utility companies have complex ownership structures but remain largely or wholly state-owned.

While there are five major companies involved in energy generation in China and two major companies involved in energy transmission, as of 2007 only three companies are approved by the government to own and operate nuclear energy generation facilities: China National Nuclear Corporation (CNNC), China General Nuclear Power Group (CGN) and China Power Investment Corporation (CPI). All other companies — both public and private — can only hold minority shares in new projects.

CNNC is a large state-owned enterprise that controls most business within the nuclear energy sector, including research and development, uranium mining, fuel enrichment and waste disposal. Established by China’s State Council as a self-supporting economic entity, CNNC describes itself as “the main body of the national nuclear technology industry” and works in both nuclear energy generation and military deployment of nuclear technology. As of May 2014, a subsidiary of CNNC, named China National Nuclear Power Co. Ltd. is preparing to raise up to 16.25 billion yuan in an initial public offering in order to fund nuclear energy projects.

CGN is also a state-owned enterprise that focuses on the generation of clean energy, including wind energy, solar energy, hydroelectricity and nuclear energy. As of early 2013, CGN had a generation capacity of 7200 MWe. The government’s State-owned Assets Supervision and Administration Commission owns 82 percent of CGN, the province of Guangdong owns 10 percent and CNNC owns 8 percent. CGN is planning to launch two initial public offerings in 2014 to fund expansion efforts.

CPI was founded in 2002 as a state-owned enterprise that works across multiple industries including nuclear power generation, coal production, aluminum smelting, railways and ports. CPI owns 19 operating power plants that generate more than 1000 MWe each, and has ownership shares in 10 nuclear power plants throughout the country.

China hopes to expand its nuclear energy production dramatically over the coming decades and achieve 200 gigawatts of nuclear capacity by 2030, up from 14.6 gigawatts in 2013. According to the National Energy Administration, China is expected to launch another 8.6 gigawatts of capacity for nuclear energy in 2014.

Challenges and Obstacles

Despite the investments being made in nuclear energy generation, there are still doubts as to whether China can achieve its expansion goals. Currently, concern over possible river pollution has delayed the construction of inland nuclear energy facilities until at least 2015. Energy consultancy Wood and Mackenzie have identified technology constraints, inadequate infrastructure for uranium-fuel fabrication and disposal, public opposition to inland nuclear plants and shortages of qualified personnel as obstacles to realistically achieving 200 gigawatts of capacity by 2030. Instead, they estimate that China will achieve a nuclear capacity of 175 gigawatts by 2030.

The National Nuclear Safety Administration is the licensing and regulatory body that governs nuclear energy in China and maintains international agreements regarding safety. Concerns have been raised about whether the NNSA has enough authority and independence to provide proper oversight to the nuclear energy industry, and senior officials at the NNSA have said that staff members lack specialized talent and experience.

In addition, the Chinese government’s “12th 5-Year Plan for Nuclear Safety and Radioactive Pollution Prevention and Vision for 2020” declared that “China has multiple types of nuclear reactors, multiple technologies and multiple standards of safety, which makes them hard to manage” and said that the operation and construction of nuclear reactors must improve. China also lacks a clear legal framework to govern the country’s approach to nuclear energy use. In 2011, research was completed on such a law, but no draft law has been submitted to the government for review.

In an effort to begin exporting nuclear energy technology, China has also been working towards the development of Chinese-made Generation-III reactors, but challenges in the development process have resulted in construction of 57 Generation-II units. This reliance on Generation-II units poses problems for the future, when other countries are expecting to transition to Generation-IV units or even more advanced technology.

China has worked closely with the International Atomic Energy Agency in an effort to maintain high levels of safety, and China has partnered with Japan and South Korea to coordinate responses in the case of nuclear emergencies.

Looking Ahead

As previously mentioned, China is dedicated to developing a Chinese-made Generation-III nuclear reactor based upon international technology. In order to achieve this goal, China has purchased a series of AP1000 Generation-III reactors from Pennsylvania-based Westinghouse Electric Company, and secured a transfer of technological information from the company. Over the course of the next few decades it is widely expected that China will become an established supplier of nuclear reactors for customers around the world.

In order to succeed in expanding nuclear energy generation capacity, China must secure more fuel for its reactors. Domestic production of uranium continues at mines around the country, but a majority of China’s nuclear fuel resources are acquired from other countries, including Kazakhstan, Uzbekistan, Canada, Namibia, Niger and Australia.

Recently, CNNC and CGN both acquired access to some of the largest deposits of uranium in the world when they purchased production facilities in Namibia. China is also currently conducting the world’s largest research effort on Thorium. A team of 430 scientists and engineers in China plan to begin operation of a Thorium solid fuel reactor in 2015 and a liquid fuel reactor in 2017.

For more than twenty years, China has been working with Russia to develop nuclear enrichment facilities within China and has two major enrichment facilities within the country. However, in February 2013, CNNC announced that the first domestically-produced centrifuge has been successfully installed at the Lanzhou Nuclear Fuel Complex. In a statement, CNNC said that this achievement “indicates that China has the independent chemical capacity to produce nuclear fuel and that it has fully grasped uranium enrichment centrifuge technology.”

Finally, China must urgently develop highly skilled and well-trained workers in order to continue expanding its nuclear energy generation capacity. It is estimated that China will need to hire 6,000 new workers every year within the nuclear power sector, yet only several hundred college students graduate each year with the necessary skills. Currently, six leading universities train nuclear specialists, but retaining a trained workforce has been a challenge. In response, the Chinese nuclear energy industry is providing high wages, although it is yet to be seen if China can train the large workforce that its nuclear energy expansion will demand.

China’s commitment to increasing nuclear energy capacity is clear. There are serious concerns over the country’s ability to safely manage such a large expansion of nuclear capacity, but pressure to address air pollution and provide the energy necessary for the country to continue rapid economic development means that China’s nuclear energy program will continue to grow. China is working to improve its domestic capacity to execute all phases of nuclear energy generation, and is continuing its efforts to become an exporter of nuclear technology in the years to come.