Springtime in China

Each year in April, a large nuclear exhibition takes place in China, with the venue alternating between Beijing and Shanghai. This year it was Shanghai’s turn and the 7th International Exhibition on Nuclear Power Industry 2007 was notable for the high level of interest, even excitement, in the spring sunshine. Whatever the growing list of possible reactors elsewhere in the world, it’s clear that China is very much where the current action in nuclear is centred. One may express doubts about the Chinese ability to reach their widely quoted target of 40GWe of nuclear capacity by 2020, but if anyone can do it, they certainly can. The sheer pace of infrastructure investment over the whole country, in their provincial cities as well as Beijing and Shanghai, suggests that it isn’t impossible. The level of interest and activity around the exhibition reflected this.

The Shanghai events are led by the China Atomic Energy Authority (CAEA – the key governmental body in nuclear) in conjunction with a Hong Kong-based exhibition organiser and located in a smart modern exhibition centre in the suburbs. This year, there was an additional Seminar on the Third Generation Nuclear Power Technology organised at a nearby state guesthouse, resembling a leafy country home and gardens within the high-rise urban sprawl. The exhibition itself had both Chinese and foreign exhibitors grouped together, in contrast to the Beijing events (organised, in contrast, by the local nuclear companies), which see them rather isolated in separate pavilions. Being together works rather better and emphasises that this is indeed a global industry.

This was immediately confirmed by the observation that Westinghouse had no stand at the exhibition, relying upon China Power and Investment Corporation (CPI) to showcase its AP1000 on its impressive stand. This also immediately demonstrated one of the talking points at the exhibition and seminar, namely the decision by the Chinese to shift the site for two of four AP1000s that have been ordered from the anticipated Yangjiang site in Guangdong province (which will now host two Areva NP EPRs), to the Haiyang site in Shandong province.

National players

CPI is clearly the rising star in nuclear power generation in China. It was created from the ashes of the former State Power Corporation and while still in public ownership, has small minority stakes in several of the existing reactors in China (including the four already operating in Guangdong province). Haiyang will be its first majority ownership project and the exhibition display showcased six AP1000s on the site. CPI also has plans for majority or minority shareholdings in many of the planned reactors in China, in several cases along with the China Guangdong Nuclear Power Corporation (CGNPC), which is now stretching its interests outside its home province with over 20 reactors at various planning stages. It is also evident that there are now firm plans for reactors in areas away from the coastal provinces, where Chinese economic development has so far been concentrated. This is in line with stated national policy to spread development westwards to lessen growing income inequality.

There are also now provincially-based investors stepping forward to finance new reactors in their own areas of China but it seems clear that the future structure of the Chinese industry, from the generation side at least, will be led by three large national players, CGNPC, CPI and China National Nuclear Corporation (CNNC). CNNC’s interests are largely concentrated at the Qinshan site in Zhejiang province and it’s conceivable that it may eventually become focused on the complete fuel cycle and be divested of its reactor interests. This is mere speculation at present, but follows the pattern established elsewhere, notably in France with Areva and soon coming in Russia, with the expected consolidation of the supply side there. CNNC, however, remains the showcase for Chinese domestic reactor technology, and so long as additional Chinese reactors (as opposed to imported technology) are under construction (for example the latest two 600MWe units at Qinshan), CNNC may retain a significant role in generation.

Absent friends

Other notable absentees from the exhibition were GE and AECL. GE knows that it rather missed the boat in China, in contrast to its successes in Japan, and will now struggle to get its BWRs back in consideration, given that the Chinese have now decided to focus on PWR technology for Generation III reactors (in the shape of the AP1000 and EPR). Given that the two Candu units at Qinshan are widely praised in Chinese circles (both their smooth construction process and subsequent operating performance), AECL must still have some hopes in China. Foreign technology adoption in China is now focused solely on Generation III reactors, so it is unlikely that China will order additional Candu-6 reactors. AECL is therefore probably in much the same position in China with its ACR-1000, as GE is with the ESBWR – they need to achieve initial orders elsewhere, get the projects well underway and then revert to the Chinese with some good news.

With Westinghouse sold to Toshiba and British Nuclear Group not exhibiting, the British presence at the exhibition was negligible, in stark contrast to the Spanish industry which had its own impressive stand representing eight nuclear companies. The Japanese were also not much in evidence and it was notable that Mitsubishi Heavy Industries was located near to its new international partners, Areva. Its export hopes for reactors must now be concentrated in the USA, with TXU having chosen its large APWR for an anticipated combined construction and operating licence (COL) application in Texas. The French nuclear industry had its own large space for the smaller companies, with both Areva and Electricité de France (EdF) having their own large stands, showcasing the full range of their activities. Having gained a further foothold in Guangdong province with the EPR, Areva must be expecting further orders to follow. The Yangjiang site itself was originally designed for up to six 1000MWe reactors. Alstom is also well-positioned to supply its non-nuclear islands to any of the new reactors in China, including the AP1000s and, indeed, any further VVER-1000 orders the Russians receive. (Alstom signed a recent cooperation agreement with Atomstroyexport.)

With the Tianwan reactors at last going online, the local generation company stand showed a computer-generated image of no less than eight VVER-1000 reactors on the site. Another two have apparently been ordered, but whether the Chinese will go further with technology regarded as Generation II (in their eyes) remains to be seen. All will no doubt depend on early experience with the AP1000 and the EPR. Rosatom had its own separate exhibition stand particularly showing Tvel’s interests in the fuel cycle.

There was, however, little evidence of China’s clear desire to acquire more uranium and enrichment services, at an exhibition and conference devoted essentially to power generation and ancillary services. There was also relatively little on waste management and decommissioning activities, given the relative youth of the Chinese industry. An interesting thought was the contrast likely to be seen at any British nuclear exhibition.

Doosan rising

Mitsubishi’s loss with Westinghouse taking an alternative Japanese partner (new owner Toshiba) is turning out to be Doosan of Korea’s gain. It was recently learned that Doosan would supply reactor vessels, steam generators and integrated head packages to the four AP1000s in China. This is a very significant contract and may lead to working together in other key target AP1000 markets, notably the USA. Westinghouse, of course, has long played a significant role in the Korean industry through its adoption of a Combustion Engineering design for its standard PWR. Westinghouse still earns substantial revenues from further work streams on these reactors including the latest 1400MWe version, which was shown on the exhibition stand of the Korean industry. Export hopes for this probably reside, initially at least, in potential new Asian nuclear countries such as Indonesia and Vietnam, rather than in China or the USA.

To conclude on the exhibition, one was struck by the generally optimistic expectations expressed by everyone present. You can see it in the delegates’ eyes and the enthusiasm of those staffing the stands. Although this is just one of many new and expanding industrial sectors in China, which must face competition for resources (notably key young people to staff it), it appears that the central government is gradually getting its act together in offering the necessary backing. Despite the strong enthusiasm from the provincial administrations for new nuclear build, ultimate decisions have to be sanctioned in Beijing and this could always be the weakest link in the chain. The recent contract awards to Westinghouse, Areva and Doosan are probably 18 months later than was previously expected and similar delays in future will make the 40GWe target by 2020 even more challenging.

Generation III seminar

CAEA organised the concurrent seminar on Generation III technology in the margins of the exhibition. It was interesting to note the stark line the Chinese draw between different reactor generations, while it’s clear that they are somewhat humble about their own established technology. This they put very much at the Generation II stage (although clearly the work done in China on HTGRs and fast breeder reactors is in another category). So the latest 600MWe reactors at Qinshan, the 1000MWe examples at Ling Ao in Guangdong (derived from the Areva design but now built with very high local content) and the VVER-1000s at Tianwan are all regarded as well-established but rather old technology. To build Generation III reactors, the Chinese have realised that they need technology transfer from the West and this was clearly one key to the bidding between Westinghouse and Areva for the recent contracts.

Indeed, the overall theme of the seminar was this important technology transfer, with the underlying view being that the Chinese would eventually master it and eventually be able to build their own Generation III designs with high local content. They have been working on a 1000MWe design for some time, but it seems clear that they will observe how the AP1000s and EPRs go in China before commercialising this. The Chinese are therefore still maybe 5-10 years behind the Korean industry, which has reached the point of offering a standard Korean reactor design to be replicated, if necessary, in large numbers of units. The Chinese will almost certainly get there in the end, but maybe not before the industry moves onto Generation IV (where they have already done some good work).

There were also opportunities at the seminar for representatives of Westinghouse, Areva and Doosan to talk about how their contract awards will work. It’s early days as yet, with much to be decided and confirmed, but local Chinese companies also presented on equipment localisation, undoubtedly another important element in the contract negotiations. It’s clear that the Chinese see the Doosan link as the way to learn to produce Generation III plant components locally. Officials talked of close to 100% local content on AP1000s after the initial four units, but this is widely regarded as over-optimistic, based on the experience of increasing local content at Ling Ao with the 900MWe Areva designs. Senior staff of the utilities CGNPC and CPI also spoke about paving the way for adopting the latest generation of technology (the former) and the Haiyang project development (the latter). In the case of CPI, it is going straight to a Generation III reactor with no experience of Generation II as a project leader.

One final revelation at the seminar was the recent setting up of the Chinese Nuclear Energy Association under president Zhang Huazhu, formerly chairman of CAEA and a vice minister in the government. This rather completes the jigsaw of the Chinese industry, as it will perform the role of an industry association, providing research, information and educational (but not lobbying in the western style) services on behalf of its members. Some of this has historically been accomplished by the Chinese Nuclear Society (staffed by CNNC appointees) but this may now become more like a typical western nuclear society, with individual memberships and a strong knowledge management role.