Big nuclear build in China
…Three-quarters of today’s 440 nuclear reactors are located outside of Asia, mainly in North America and Europe. But between now and mid-century, three-quarters of the 500 or more new installations will be in China, India and the rest of Asia. The story of how this is happening is revealing.
As its economy grows 9 per cent every year, China’s electricity demand expands 12 per cent annually. This requires a doubling of generation capacity every six years from a base already approaching US levels. The building of power stations of all kinds is proceeding apace.
Of the 57 nuclear reactors under construction globally, 24 are in China. Another 27 are due to start in the next three years which together with the current 12 operating units makes 63, well on the way to meeting China’s target of 70 gigawatts of nuclear generation by 2020. But even at this rate, the contribution from nuclear power grows from 2 per cent to only 5 per cent in China. The world of fossil fuels is not quickly overtaken in a country starved of affordable electricity.
Some 200 gigawatts of nuclear electricity is planned by 2030 in China – that will be three times Australia’s total energy capacity then.
Chinese firms are insisting on transfer of nuclear intellectual property with all construction contracts and they are improving upon Western project management. Most financial risk of cost overruns occurs during the construction phase. Today that period averages 60 months, but US-French-Chinese consortiums are on a path to halving this in the next few years. The Chinese nuclear industry is focusing upon standardisation, operational excellence, unit cost and cycle time reduction – familiar manufacturing metrics whose optimisation has produced Chinese leadership in many products over this past decade.
This contrasts with the West, where regulatory and political hurdles handicap new facility starts and construction. Even getting clearance to build new conventional electricity transmission grids can take 10 years in the US. As a result, the general trend is for brownfield expansion – upgrading existing facilities, improving uptime, and extending the licence period for operations. These are low-risk and lucrative approaches adopted in a number of the sites where some of the 104 US reactors are located. But this means that, progressively, project management leadership of new build will be found in China, which is on a path to be a major reactor builder and exporter in the next 20 years. China will become best in class for first-of-a-kind development.
The Chinese journey will shape Australia’s nuclear energy choices when we are ready to make them and our first-of-a-kind risk will be mitigated by this Chinese experience and leadership.
India is pursuing a different nuclear path with similar determination. Innovation is its theme. As with its GDP, its energy needs mirror China but lag by 10-15 years. Currently, 40 per cent of the population has no access to electricity. Some time after 2030 when India’s population passes that of China, so will its energy requirements catch up. Each of China and India is expected to have more nuclear energy at mid-century than any other nation and they will be the world’s largest importers of uranium (though perhaps not from Australia). And nuclear power is projected to be the largest source of electricity production globally at that time.
Where the industry expects Generation 4 breeder reactors to become commercially available around 2040, India asserts its first 500-megawatt unit will be working in three years. As the world discovers the appeal of small, modular gas-cooled units, India expects to be the earliest and largest market for this technology – in its towns and powering desalination plants. Where global interest in thorium as an abundant alternative fuel to uranium has waned, India is working hard and successfully on novel fuel mixes and burn cycles. Its strategy reflects national confidence in technological innovation and a happy diversity of approaches.
Neither China nor India is yet ready to compete in major export markets. This is an opportunity for Russia, which has 14 reactors under construction domestically and an aggressive government-led, export-oriented outlook. It is a foundation member of the nuclear community and controls 40 per cent of global uranium enrichment capacity. It has also built strong relationships with developing countries and it is no surprise to learn that it has just been chosen to supply Turkey and Vietnam with their first nuclear power stations.
South Korea is also becoming a serious player, having won an important United Arab Emirates contract for four reactors valued near $US20 billion ($A20.8 billion) on the basis of its engineering excellence, on-time completion record and sharp costs.
But the core narrative is this: in a now familiar manner, China is importing the best Western technology and knowhow in nuclear power, gaining experience in deploying reactors in quantity, improving upon Western designs and project management, and developing an important export capability for one of the world’s largest energy industries. Its target markets won’t be in the West, where regulatory and social issues entangle nuclear decisions, but everywhere else.
Incidentally, the next World Nuclear Association Conference will be in Beijing.