CGN Power’s latest project delay deals another blow to China’s nuclear energy ambition
China’s largest nuclear reactor and builder delays commissioning of the first unit to later this year
The latest commissioning delay at CGN Power’s nuclear project in Taishan, in Guangdong province – the third in two years – will lead to a further deferral of 5 billion yuan (US$770 million) in annual revenues and potentially more cost overruns, according to ratings agency Moody’s.
The delay is another setback for China’s ambitious development programme, which aims to raise its installed nuclear power capacity to 58 gigawatts by the end of 2020 from 34.73GW last year, and the world’s hopes for a successful launch of third-generation nuclear reactors.
They are touted by their designers to be safer and more efficient than second-generation ones, a key selling point after the global nuclear industry was dealt a blow by Japan’s Fukushima disaster in 2011.
“The delays reflect our concerns over the high execution risk for CGN in rolling out its aggressive expansion target and its adoption of a new generation of nuclear technology,” Ada Li, senior analyst at Moody’s, wrote in a note on Tuesday.
“The delays also imply the deferral of cash flows from the two nuclear units and potential additional capital expenditure, which would further pressure CGN’s financial metrics.”
She estimated the two reactors to initially make 5 billion yuan in annual revenues, amounting to 7 per cent of the firm’s 2016 revenues, adding its repeated delays are “credit negative”.