Last week we wrote about the seeming technological advancement of China versus the US. This week we received two more indicators in the energy area supporting this theme. First in the UK yesterday, the government's Office for Nuclear Regulation and the Environment Agency both approved a Chinese designed HPR1000 reactor as "suitable for construction in the UK." This is the Hualong One reactor design. The Bradwell Power Generating Company Ltd. is a joint venture between France's EDF and China General Nuclear (CGN). The proposed site for the two reactors is in Bradwell, England near the shuttered Magnox reactors. The French-Chinese consortium filed an initial application for these plants with the UK's Department of Business, Energy, and Industrial Development in 2016.
Earlier this month the government of Argentina and China National Nuclear Corp, the state owned power company, signed a contract to construct a Hualong One design reactor, called Atucha lll near Lima in Buenos Aires province. The press release clearly stated an $8 billion (US) cost estimate for the 1200 MW plant.
The Hualong One nuclear reactor design is a so-called third generation, gigawatt scale, pressurized water reactor. The only other modern reactor designs of this type are Westinghouse's AP1000 and the French/EDF EPR (Evolutionary Pressurized Reactor). The Hualong One it seems was designed to compete both domestically and internationally with these two other reactor designs.
Argentina is not the first overseas location using Hualong One technology. Pakistan's Karachi Nuclear Power Plants Units 2 and 3 both utilize this reactor design. Construction of these nuclear units began in 2013. Unit 2 entered commercial service in May of last year and unit 3 recently loaded fuel and is slated to go commercial next month.
We don't think we need to remind oilprice readers that construction of these third generation, 1200 MW PWRs by Westinghouse and EDF have been problematic to say the least. Recent cost estimates out of Georgia for the Westinghouse designed Plant Vogtle approximate $34 billion (for two reactors). EDF has had numerous difficulties, delays and cost overruns at its two sites in Flamanville and Olkiluoto (Finland). If the Chinese can build their reactor and enter it into commercial service on time and within budget this would be an enormous plus for their international technological prestige-especially given the dismal performance of their obvious competitors.
Admittedly, an $8 billion reactor is better than a $17 billion reactor, and in that respect, the Chinese design has an advantage. We are not, however, convinced that a refinement of current big plant nuclear design is the best way to go. Still too much risk tied up in one facility. Build smaller better may make more sense.
By Leonard Hyman And William Tilles for Oilprice.com
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Leonard S. Hyman is an economist and financial analyst specializing in the energy sector. He headed utility equity research at a major brokerage house and… More