Wealthy Nations Daily Update - China Nuclear Energy

In China’s new 5 year strategy covering 2016 – 2020 there is a proposal to start building over 100 nuclear power reactors over the next decade. According to the plan the Chinese government will on average construct 7 new reactors each year between now and 2030. By 2050 China wants to have approximately 400 nuclear power stations producing over 350GW of power. The final bill for this investment is expected to exceed USD 1tn.

At the moment China has 27 operating nuclear power stations, and 24 under construction, all told the plan is for these to be producing 150GW of power by 2030. By way of comparison the US has 99 and France has 58 operating at the moment. The medium and long term goal is for the Chinese to be building and operating the most technologically advanced nuclear reactors globally. Added to this as we have noted in a previous daily there will be a Chinese designed and built nuclear power plant in the UK in the coming years.

The 2 main reasons that the Chinese Government is putting so much money and effort into nuclear power is export potential and the environment. It is well known that over the last few years China’s air quality has suffered as a result of its phenomenal growth. Coal fired power stations are relatively cheap and easy to build; however this has had side-effects on air quality and pollution. Now coupled with the expected need to double their energy supply, largely due to the fast rising middle class, and the international pressure to have more consideration to the environment, the government realised it need to act. So if the Chinese government is going to spend such vast amounts of money developing and building these new nuclear plants, it makes sense to build them to meet or exceed international standards of regulation globally both now and in the future. This then gives huge export potential for the industry. Nuclear reactor components have very long lead times and are hugely expensive if manufacturing from scratch. The extremely large size of many nuclear components, allied with strict precision and quality requirements and a high cost, presents significant challenges for standard machining processes. If anything goes wrong and parts have to be scrapped, the consequences can be severe – an entire multi-billion-pound build programme can be put months behind schedule.

With the investment China is proposing, countries that want nuclear energy (especially smaller ones), but want to spread some of the risk will be attracted to the idea that it can buy practically all the components it needs off the shelf that are of international standard from the Chinese whilst shortening supply times.