China Moves Forward with New Nuclear Reactors

On February 27th, China's Ministry of Environmental Protection (MEP) approved the construction of two new nuclear reactors in the eastern coastal province of Shandong. The plan calls for the construction of two Westinghouse AP1000 reactors, at an estimated cost of $5.1 billion. The purchaser will be the state-owned utility China Power Investment. China hopes to be the first country to install Westinghouse's third generation design, although there are two reactors under construction in the U.S. using the AP1000 design.

China has a sense of urgency that is not felt elsewhere, and for good reason. Its cities are choked in smog, and aside from needing more electricity capacity to power its growing economy, it also needs to find cleaner sources of power and shut down some coal plants. Thus, China has ambitious plans for nuclear power. While China only has 14.6 gigawatts of nuclear capacity as of 2013, it plans to scale up nuclear reactors to a combined installed capacity of 58 GW by 2020. It then hopes to nearly triple that figure to 150 GW by 2030. It has 31 reactors under construction and about 8.6 GW are expected to come online in 2014.

China's plans for nuclear are impressive, but the torrent pace at which they are installing new reactors is starting from a small base. Nuclear power only accounted for around 1% of China's electricity in 2012, compared to two-thirds coming from coal. And even if China meets its 2020 goal of 58 GW of installed nuclear capacity, it will account for only half of what the U.S. has installed today.

Still, China offers the best hope for nuclear power, as the industry has struggled to grow since the heydays of the 1960s-1970s. Permitting and construction delays, cost overruns, and public opposition all but doomed the industry's growth in the United States. The same is largely true for other developed countries. Fukushima was another huge blow, leading to a (temporary?) withdrawal from nuclear power in Japan, and a soon to be permanent one in Germany.

Whereas the industry has stalled out in the developed world, China remains a bastion of hope. A good article by John Quiggin in The National Interest makes the case why nuclear power could work in China where it failed elsewhere (he focuses on France). China has a centralized government willing to ignore local opinion, which he argues was successful in building the reactors of the past. It is capitalist, but with heavy state control. China is also content focusing on a single reactor design as its favorite - the AP1000 - which helps in getting scale and experience. This will keep costs from rising too much. He argues that France's dirigisme of the 1960s-1970s was similar to China today, and that those conditions allowed France to build a nuclear fleet that makes up 75% of the country's electricity generation, the highest share in the world.

Nuclear power won't be without stiff competition, even in China. The Chinese government still has plans for large additions of coal-fired power plants, despite the air pollution crisis. Renewable energy is also becoming more of a prominent pillar in the state's five-year plans. As costs decline, that trend will only accelerate. The Chinese government wishes it could rely much more on natural gas, but has had trouble tapping its abundant reserves trapped in shale. If it could unlock those resources, nuclear power's future in China would take a hit.

For better or worse, China is where the action is at for the nuclear industry. Aside from a small number of projects under construction in the West, the industry's future will depend heavily on how successful it is there.

By Nicholas Cunningham of Oilprice.com