3 Chinese state firms looking to build nuclear plants abroad

State Nuclear will consider various financing options to help potential customers as it targets opportunities in Brazil, UK and South Africa

PUBLISHED : Tuesday, 04 March, 2014, 10:09am
UPDATED : Wednesday, 05 March, 2014, 12:56am

State Nuclear Power Technology, one of three Chinese state-owned firms seeking to build nuclear plants overseas, is keen to take a crack at opportunities in Brazil, Britain and South Africa, an official at its finance unit said.

Wang Henghai, deputy general manager of State Nuclear Power Finance, told the Asia Nuclear Business Platform conference last week that the firm would consider a variety of financing options to help its potential customers in those countries.

"We hope to have a mixture of domestic and international funding, a mixture of equity and debt financing, and a mixture of government- and market-based financing," Wang said.

China has all the necessary ingredients for success in global nuclear power expansion

Kim Young-joon, a partner in the Hong Kong office of Milbank, Tweed, Hadley & McCloy and a member of the US law firm's project finance group, said: "China has all the necessary ingredients for success in global nuclear power expansion. It has relatively strong operational safety records, strong government and deep capital resources."

But Kim said success within China did not guarantee success overseas since, unlike many other industries where the country's economies of scale, huge domestic market and easy access to capital brought huge advantages, building reactors abroad involved the export of not only hardware but an entire "ecosystem", which entailed regulatory knowledge and compliance, human resources and after-construction services.

Set up in 2007, State Nuclear Power Technology is the general contractor for the first four 1.1-gigawatt reactors being built in China based on US nuclear engineering firm Westinghouse's AP1000 design, incorporating third-generation reactor technology with advanced efficiency and safety features.

The firm is the developer of the China Advanced Passive 1400 design. Based on its experience implementing the AP1000 design, it made modifications and came up with its own design, in which each reactor has 1.4GW of generating capacity.

Chinese firms need to build their credibility overseas with regard to the reliability of their plants, given that the country's strength in the construction of nuclear power plants is not widely known overseas outside the industry.

Kim said the three state firms in the sector were encouraged to compete for overseas business, but China might want to consolidate their efforts and resources to enhance their international competitiveness.

He said that when Korea Electric Power beat its Japanese rivals to win a deal in 2009 to build a nuclear plant in the United Arab Emirates, Japanese firms pooled their resources in subsequent years and adopted a "Japan Inc" approach to compete.

Beijing-based State Nuclear plans to start construction of the first CAP1400 demonstration reactor in Shidaowan, Shandong province, this year and commission it in late 2018, according to Xinhua.

The schedule is about a year behind the original target as Beijing suspended new projects for about 18 months to review the safety of all nuclear power projects after Japan's Fukushima disaster in 2011.

The two other state-owned nuclear power plant developers, China National Nuclear and China General Nuclear Power, have also been looking for opportunities to expand abroad, even though they have the world's biggest nuclear power expansion programme to complete.

After raising industry safety standards, Beijing set a target for the country's installed nuclear generating capacity of 58GW by 2020, up from 12.57GW now, although insiders had believed the industry was capable of generating 70 to 80GW.

The two firms announced a plan last year to take a combined 30 to 40 per cent stake in a consortium led by Electricite de France to build French-designed third-generation EPR reactors in southwest England. It is China's first nuclear project in a developed country, although it has helped build reactors in Pakistan.

Tang Chi-chung, director of the nuclear division at Hong Kong's CLP, which has a 25 per cent stake in Guangdong's Daya Bay nuclear plant, said the mainland industry faced the question of whether it had sufficient human and other resources to tackle overseas as well as domestic projects.

"Why spare the capacity to help other countries to solve somebody else's [energy] problem?" he said. "That is a question the Chinese government needs to think about."