The year 2011 is unusual for Chinese nuclear power. The Fukushima accident cooled down “overheated” demands in nuclear construction. Now the question is the direction of Chinese nuclear power in 2012.

Looking back at the past year,  Chinese high-level government officials or Chinese nuclear corporations top management expressed their opinions on the future development of nuclear power.  However, it seems from the strategies and actions implemented in 2011, China will continue to stick to their policy of developing nuclear power, and nuclear power will occupy an increasing proportion in China’s power generation. Hence, we can conclude the future of Chinese nuclear market is clear and the construction of nuclear power plants will eventually be up to speed again.

Reasons for developing nuclear power

Currently, China’s energy is mainly thermal and hydraulic power. According to reports, by the end of 2011, China’s power generation capacity has exceeded 1.04 billion KW, in which thermal power takes up 60%. However, the development of thermal power is restricted by several factors, such as the supply and transportation of coal, the reduction of greenhouse gas emissions, etc. As for hydraulic power, although State Council’s no.1 document pushes the hydraulic power to be the investment focus in 2011, growth is still limited. China has about 400 million KW hydroelectric resources, and currently only developed 230 million KW of it.

Regarding the new energy represented by wind power and solar power, their installed capacity lags are far behind of nuclear power’s capacity. Besides, the technology has been a bottleneck for the development. Hence, new energy will not be the mainstream energy in the long term.

Policy changes

On March 16, the State Council was determined to conduct an overall review on current nuclear facilities and require related departments to draw up nuclear safety plans and improve the “nuclear power long- and middle-term plan”. However, before approving the nuclear safety plan, approval for new nuclear power projects were suspended. Instead, China began the nation’s largest-scale review on its current nuclear power plants and many projects were halted.

At the end of the 2011, some positive signs were seen in terms of policy. The Ministry of Environmental Protection passed the draft proposal for the “’twelfth five-year’ plan and 2020 objective for nuclear safety and radioactive pollution prevention” and now the policies are submitted the State Council for approval. Apart from this, the Nuclear Safety Administration issued its new operation licensing under new operational management to CNNC Qinshan Nuclear Power Base on November 26th. This is the first time that Chinese nuclear power has moved forward since the Fukushima accident. On December 29th, the State Council launched Radioactive Waste Management Regulation, which further improved the system of storing and disposing radioactive waste. The restart of new projects can be expected soon.

Investment prospect

At present, China has 14 units in operation, all of which are using Gen 2+ technology (the second generation advanced technology). 27 units have been approved and are under construction, 6 of which adopt Gen 3 technology and the rest of which adopt gen 2+ technology.

It is said the proposal draft for the “’twelfth five-year plan and 2020 objective for nuclear safety and radioactive pollution prevention” proposes detailed requirements and safety measures on nuclear power, research reactor, fuel cycle, nuclear technology utilization, nuclear safety equipment, uranium ore and retirement of nuclear facilities along with technical guidelines, emergency response and monitoring methods. Ultimately, “the aim is to raise the safety level of nuclear facility and nuclear technology utilization and decrease the risk of radiation to the environment,” the Ministry of Environmental Protection said in a statement. As such, China will continue to push safety developments of nuclear power and nuclear technology utilization.

However, “if the standard of nuclear safety rises, the cost of nuclear company’s site selection and safety construction will also increase. Then the development of nuclear industry will inevitably slow down,” sources said.

Yet according to the analysis of security companies, the installed capacity of units in operation has exceeded 41 GW and around a total of 16 GW are under construction. If we approximate 100MW unit costs about 20,000RMB/kw then the future investment would be about 320 billion RMB for the 16 GW capacities that still needs to be constructed.