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China’s nuclear plant makers seek new markets along the ancient Silk Road into Asia, Europe, Africa and Middle East

‘One belt, one road’ policy for financing and support for infrastructure projects is helping nuclear plant constructors expand into overseas markets

PUBLISHED : Monday, 04 April, 2016, 1:01pm
UPDATED : Monday, 21 August, 2017, 9:11am

China, which has almost half the world’s pipeline of nuclear power projects to be built by 2030, wants to export its expertise in the industry as part of President Xi Jinping’s ‘one belt, one road’ international development strategy.

The policy was first proposed in 2013 to promote infrastructure construction deals overseas along with goods and services trade along the ancient Silk Road from China to Europe and along the ancient maritime trade route linking China to southeast Asia, the Middle East and Africa. The state is offering financing at a time when China’s economy grew at the slowest rate in 25 years and its industry faces severe overcapacity problems.

Beijing has encouraged local firms to become involved in infrastructure projects in southeast Asia, Europe and Africa. Chinese nuclear reactor builders are a growing force in the global nuclear industry.

“The export of nuclear reactors will become one of the key pillars for executing China’s one belt, one road strategy,” Zheshang Securities analyst Zheng Dandan said.

China’s power generation equipment makers have won orders after the traditional coal-fired power segment shrank. The nation is attempting to shift towards cleaner energy to combat air pollution which was so bad in December that Beijing issued its first red alert, triggering school closures. Nuclear power may offset that.

The market opportunities are ample.

The world has around 384 gigawatts of installed nuclear power generation capacity in 400 reactors, according to the World Nuclear Association. There is 69 GW more being built in 15 nations and around 182 GW have been planned.

Chinese firms are marketing the Hualong One-build reactors which come with a US$2.5 billion per GW construction cost . Planned projects represent a potential market of US$455 billion or 1.5 times the annual economic output of Hong Kong.

Based on International Energy Agency projections for 29 major oil-consuming nations that take into account policy commitments to cut carbon emissions, global nuclear generation capacity could grow by a compound annual average 2 per cent to 624 GW by 2040. If more aggressive low-carbon emission policies are adopted, it could grow 3.3 per cent a year to reach 862 GW.

Some 46 per cent of the increase is expected to come from China, while India, South Korea and Russia make up another 30 per cent. The United States could account for 16 per cent and 8 per cent from the rest of the world.

Together they are projected to more than offset a 10 per cent drop in capacity in the European Union, where Germany, with the continent’s largest economy, intends to phase out nuclear power in the long term due to safety concerns.

“The percentage share of nuclear power in the global power [production] mix increases to only 12 per cent, well below its historic peak [of 17 per cent],” said a World Nuclear Association information paper, indicating the potential for growth in nuclear power after Japan’s Fukushima-plant disaster.

“Energy security concerns and greenhouse constraints on coal have combined with basic economics to put nuclear power back on the agenda for projected new capacity in many countries,” the group said in its paper.

Chinese nuclear firms talk to avoid conflict on overseas construction deals

In 2011 the magnitude 9.0 Tohoku Earthquake hit Japan. Less than an hour later, a 14 metre highwave arrived off the northeast coast and flooding the Fukushima plant. Subsequent nuclear meltdowns resulted in the release of radioactive material into the atmosphere.

Notwithstanding concerns about those disastrous consequences, nuclear power is considered more cost-effective and reliable than other forms of clean energy such as wind and solar power due to its consistent and large output.

Three Chinese state-backed firms are actively pursuing opportunities to export their reactor construction expertise, especially in developing nations that do not have their own construction capabilities.

Beijing-based projects developer China National Nuclear Corp (CNNC) chairman Sun Qin was quoted by state media China News Service last month as saying that 80 per cent of the up to 300 new reactors projected to be built by 2030 globally could be in ‘one belt, one road’ nations.

CNNC wants to build 30 reactors in such nations, and will use Argentina as a base to develop the South American market, Algeria for reaching out to the greater African market and Pakistan where it is building a project to develop the Asian market, Sun was reported as saying.

State Power Investment, formed via the merger of one of the nation’s “big five” power generators China Power Investment and general contractor State Nuclear Power Technology last year, is also pursuing overseas projects.

It has partnered with the US nuclear technology powerhouse Westinghouse to negotiate a potential deal to build a nuclear power project in Turkey. It has also pursued opportunities in South Africa.

Shenzhen-based projects developer China General Nuclear Power is working towards winning potential projects in Britain, Kenya and southeast Asia. It won one bid to build a plant in Romania.

The mainland leadership has made the globalisation of Chinese firms a key part of its economic reform plans, looking to establish the nation as a major provider of value-added and high-end goods and services. In a series of articles this week, the South China Morning Post examines the key industries targeting overseas expansion, beginning with the nuclear power industry.