Nuclear giants eye up China
Foreign nuclear power companies from the United States, France and Russia have geared up their sales pitches in China over the past few months as China is selecting partners to help develop its nuclear power industry.
It is widely anticipated that the potential partners could win billions of dollar in technology and equipment export contracts and hire thousands more workers as China is planning to launch a massive nuclear power construction scheme over the next few years.
Earlier this month, a vice-president from the Pittsburgh-based but UK-owned Westinghouse came to Beijing to meet executives from the China National Nuclear Corp (CNNC), the nation's major nuclear power conglomerate.
The visit is the US side's latest promotional activity. In April, US Vice-President Dick Cheney flew to Beijing to talk with leading Chinese Government officials on terrorism and the Democratic People's Republic of Korea's nuclear issues, but he also promoted Westinghouse's nuclear power technology to Chinese leaders.
Coinciding with Cheney's visit, Anne Lauvergeon, president and CEO of French nuclear giant Areva, was in China to discuss business co-operation opportunities with CNNC executives.
While the development of nuclear power stagnates in other parts of the world, China has become a "nuclear goldmine" that everyone is coveting.
Beijing has unveiled a massive new round of nuclear power plant construction. China wants to use more clean energy such as natural gas and nuclear power to meet the surging energy demands in its economically booming coastal areas and also reduce pollution.
The government plans to raise the country's nuclear power generating capacity fourfold to 36,000 megawatts by 2020. That can be translated into at least two more nuclear reactors annually over the next 16 years.
"China's market is probably showing the future of the world nuclear industry," said Rene de Preneuf, the chief China representative of Areva.
More importantly, China is considering picking up one strong partner to help it build dozens of new nuclear plants over the coming years.
By selecting one partner, China wants to standardize technology and build up competence.
This standardization helps the operators cut costs with the mass production of equipments. And it also helps improve the skills and capability of local suppliers more quickly, and thus increase the localization of the new nuclear plants.
China now has 11 nuclear reactors operating and under construction in East China's Zhejiang and Jiangsu provinces and South China's Guangdong Province, importing technology from France, Russia and Canada.
Analysts say China is likely to duplicate more reactors, with improvements in current technology, on existing sites for quick expansion. Meanwhile, it will also seek the latest technology from the foreign partner to build new reactors at new sites.
By duplication, the nuclear plant could slash the costs by as much as 25 per cent as a result of the standardized designs, shared infrastructure, increased localization and shorter construction period, said Gary Kugler, senior vice-president of Atomic Energy of Canada Ltd.
CNNC General Manager Kang Rixin said the company is expected to duplicate new reactors at Qinshan Phase II in Zhejiang and at the Ling'ao plant in Guangdong. The Qinshan Phase II now has installed two self-developed 600-megawatt reactors, while two 1,000-megawatt French reactors are operating at the Ling'ao plant.
CNNC will also invite international tenders for new plants in Sanmen in Zhejiang Province and Yangjiang in Guangdong Province, said Kang.
Both plants are understood to be equipped with at least two 1,000-megawatt nuclear reactors each.
For the new plants, it is not clear whether China will implement the latest next-generation reactors right now or will the current technology with some improvements.
Areva's de Preneuf believes it is more pragmatic for China to adopt a step-by-step approach, rather than jump to the latest Generation III at once.
"If you stick to Generation II Plus, the advantage is that you can increase the localization more as much of the technology has been transferred," said de Preneuf.
"If you jump from now to Generation III, you will have some bottlenecks in the manufacturing of key components," Preneuf continued.
Experts said the major competition of selecting the partner will be between Areva and Westinghouse.
Areva supplied four nuclear reactors to China's Daya Bay and Ling'ao Nuclear Power plant through Framatomen ANP - a joint venture between Areva and Germany's Siemens.
It was also involved in supplying technology and equipment to the other two plants in Qinsha Phase II and Tianwan.
No Westinghouse reactors are currently operating in China. Westinghouse plans to sell its new AP1000 reactor which is to be approved by the US Nuclear Regulatory Commission within this year.
Both Areva and Westinghouse say they are confident of carving a niche into the Chinese market.
Both stressed their long-relationship with Chinese industry, their low costs and willingness to transfer technology.
"We have been working in China for more than 20 years," said de Preneuf.
"We have been introducing new technology. Our competitors, however, did not do this for quite a long time. They only have paper products."
Stressing that its technology has logged a total of 2,500 years of safe operation through out the world, Westinghouse claimed its AP 1000 was the safest, most economical reactor in the marketplace.
Vaughn Gilbert, the spokesman for Westinghouse, also stressed co-operation between China and the United States. He said Chinese engineers have participated in the development of the AP600, the precursor to the AP1000 design.
Analysts said politics will also play a role in deciding the partnership. The high-tech export has been raised as an issue in Beijing's talks with Washington to resolve the huge trade deficit between the two nations.
He Yafei, director-general of the ministry's Department of North American and Oceania Affairs, has said China was interested in buying US nuclear power technology to build nuclear power stations. But he added that export restrictions imposed by the United States has impeded this co-operation.
Although attaching importance to foreign co-operation, Chinese officials also say they will increase domestic input in the new reactors with increased localization until the nation can rely on its own in this field.
Unlike the earlier turn-key projects in which China directly imported existing foreign technology, Beijing will set its own standards and specifications for the new reactors, Chinese officials and foreign executives said.
"We should rely on ourselves, supplemented with foreign co-operation. In the long run, it could be a third way neither ERP nor AP1000 but a Chinese way," said one CNNC official.
Chinese officials said they will stick to the pressurized-water reactor technology and have ruled out the possibilities of launching heavywater reactors in the near future. But Atomic Energy of Canada Ltd (AECL), which only supplies heavywater reactors, also has an eye on long-term prospects.
"We are very patient," said AECL's Kugler. "It's such a huge market. All we need to do is to prove our strength."
AECL supplies two 728-megawatt Candu units to Qinshan Nuclear Power Phase III, which are the only two heavywater reactors in China.
Kugler recommends China to adopt both pressurized-water and heavywater technology for the sake of diversification and security.
"Don't put all your eggs in one basket," said Kugler. "If there is one flaw in one type of reactor, then you do not have to shut down all the reactors for inspection."
The company is developing the Candu 6 which could be with lower costs and higher safety controls, and will market it in three years.
(China Daily 05/27/2004 page11)