The future of the nuclear power industry lies in China. The Chinese are presently building more nuclear electric power generating stations than any other country. This year, the Chinese will add three more nuclear power stations to their fleet bringing their total up to 40, while eighteen nuclear plants are also under construction. According to MIT estimates, the Chinese can erect a nuclear plant for half the cost of a plant here in the U.S. If so, what’s the problem?
First, let’s put the numbers into perspective. Nuclear power accounts for about 4 percent of Chinese electric power production. (Nuclear accounts for about 20 percent of electric power generation the U.S.) Solar and wind generation accounts for 7 percent of production in China and the renewable component has been growing far faster than nuclear. Chinese industries spent $127 billion in 2017 on developing renewables.
Returning to nuclear plant costs in China, MIT estimates show a two-to-one Chinese cost advantage over the U.S., based on “overnight costs.” This is an engineering concept. that gives short shrift to potentially major construction expenses such cost of capital, duration of project or risk of error and subsequent redress (either actual or compensatory). Appropriately valuing the true cost of capital alone could raise these so called overnight nuclear new build costs by at least 25 percent. Adding insult to injury, perhaps half the Chinese nuclear fleet presently under construction is behind schedule and there are reports of (typical for this industry) cost overruns and construction problems.
Now, let’s get to the disturbing item in the MIT analysis as far as the nuclear power industry is concerned. The money quote? “Officially China still sees nuclear power as a must have. But unofficially, the technology is on a death watch.” The Chinese appear committed to completing all of the eighteen or so nuclear projects presently under construction, but they have not announced a new commercial project since 2016. This would give China 58 GWs of installed nuclear capacity by 2020 with another 30 GWs presently under construction. Not that much smaller than the U.S. Related: Saudi Oil Minister: Crude Stocks Should Drop Very Soon
The real change here regards discussions of the future. Pre-Fukushima, China’s power planners were considering adding 400 GWs of nuclear power by the year 2050. It appears plans of this magnitude are no longer under consideration.
Perhaps the traumatic events at Japan’s Fukushima Daiichi nuclear facility dampened Chinese enthusiasm for all things nuclear. Also, a major industrial accident of this type could potentially undermine the government’s legitimacy by stirring up political protest. We can’t know the thinking of China’s economic planners. But it appears that rising nuclear costs coupled with a lack of public enthusiasm for nuclear power have influenced the lack of new orders.
But we would argue that there are other factors for this waning interest in nuclear power. First is that renewables may be cheaper. Also, projections for power demand show a substantial falling off. The rate of Chinese electric power demand growth was 11 percent per year in 2000-2015 but is projected to fall to 2 percent per year in 2015-2030. These shifts show the Chinese economy coming to resemble those of the U.S. and Europe with less growth in the most energy intensive industries. An 11 percent growth rate in demand means a situation of almost chronic undersupply and shortage. A 2 percent growth rate in power demand permits a far more leisurely approach to long term energy planning. Related: Libya Declares Force Majeure On Largest Oil Field
We can add to the lower power usage projections uncertainty about the domestic economy in light of a looming trade war. If the Chinese government is serious about reducing carbon emissions, it might restart the expansive nuclear effort. But with such a low penetration of renewables, they could add considerable renewable generation before resuming nuclear construction.
Overall, we don’t know whether China’s nuclear construction costs are lower than say the US. Labor costs are cheaper and environmental rules less stringent. And the Chinese have a different concept of cost of capital (very low versus risk adjusted expectations).
Whatever the underlying cause, China has de-emphasized its massive nuclear new build strategy. We suspect the reason is a combination of slowing demand for electricity and deteriorating cost competitiveness of the nuclear plants compared to the alternatives.
It is not a good sign when the country that that boasts one of the better construction cost records in the business steps back and says, in effect, “Maybe we have something better to do with our money.” Chinese nuclear operators will, no doubt, continue to sell their wares abroad. China’ s CNNC is building two indigenous designed Hualong One reactors in Pakistan and CGN’s strategy appears to be invest only with generous subsidies from host governments like the U.K. But ultimately why would people want to buy a product that the producer can no longer reliably sell in its home market?
By Leonard S. Hyman and William I. Tilles
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Apparently the author missed this news item in World Nuclear News Nov 7 2018
"CNNC said the contracts, which were signed yesterday at the China International Import Expo in Shanghai, marked the implementation of framework contracts signed on 8 June between Russia and China in Beijing. Those agreements included the construction of two VVER-1200 reactors as units 7 and 8 of the Tianwan plant, as well as two VVER-1200 units are to be built at the new Xudabao site in Liaoning province.
Given that the machine should be able replace the heat source of coal plants at a fraction of coal operating cost, I wouldn't be buying a lot of PWR's.
Then lets add in China's very advanced work on FSR's and MSR's.
Science tells these machines should be cheap as dirt. China believes in science even if we don't. Why waste cash on ancient PWR tech.
Simply go to Science Direct and type in China and Nuclear or China and
Example, one paper was written by Xiao in 2018 in Advances in Climate Change Research. Who is Xiao, the Chinese Government!!
with renewables plus batteries ?