China’s nuclear power sector is expected to enjoy a boom in the coming years thanks to a host of government policy-support initiatives and the need for the country, the world’s top carbon emitter, to protect its fragile environment.
On Feb. 28, Chai Jing, a former anchor from state broadcaster China Central Television, released a documentary, “Under the Dome”, which became an instant Internet sensation. The film on air pollution struck a deep chord among the public and prompted people to think of a way out of China’s horrible smog.
One solution quickly emerged. On March 3, news surfaced that the State Council approved the construction of two new reactors of the Hongyanhe Nuclear Power Plant in Liaoning province. It marks the resumption of nuclear power projects, 26 months after China suspended approval of new projects in the aftermath of the Fukushima accident in Japan.
Giving green light to Hongyanhe project is a clear indication that China is reopening the door to nuclear power amid mounting environmental pressure. It is widely expected that a slew of new projects will be approved this year and the next, unleashing more market demand for nuclear power companies.
The enthusiasm for nuclear power is being laid out during the ongoing annual meetings in Beijing that bring together all national legislators and political advisers. Air pollution has topped their agenda, among other topics, with strong appeal to resort to nuclear energy as a solution.
According to media reports, more than four provinces, including Fujian and Guangxi, have voiced their willingness to accelerate the development of reactors.
China has already built 22 nuclear reactors, but they were all located along the coast amid technological constraints and safety concerns. Some advisers have now however suggested that policymakers must quicken the pace of approving the construction of reactors in inland China. They pointed out that Hubei and Hunan provinces had prepared for years for the approval. Both provinces plan to build reactors along major rivers to ensure sufficient water needed to cool the reactors.
Nuclear energy accounts for less than 2 percent of total installed capacity in China, pointing to huge room for growth. Now the goal is to reach a nuclear power generating capacity of 58 GW by 2020, from the current 19.1 GW level. It would make China the number three country in terms of nuclear power generating capacity, following the US and France.
Clearly, the smog hanging over many Chinese cities has added to the urgency to develop the clean fuel.
Other than the environmental need, China’s top policymakers have listed the nuclear power industry as strategically important amid the country’s go-global campaign.
Both President Xi Jinping and Premier Li Keqiang has openly expressed their wish that nuclear technology and equipment sales can be next high-end Chinese product sold globally, after the nation’s high-speed rail system.
One of the latest developments in this regard is a memorandum of understanding signed between China and Argentina last month. Under the deal, China is expected to build two nuclear plants in the Latin American country, with total investment of US$12.8 billion.
China National Nuclear Corporation, China’s largest nuclear power plant operator, plans to run the homegrown ACP1000 technology, also known as Hualong-1, in the two plants, marking Chinese nuclear firms’ first entry into the Latin American market.
In Pakistan, China has assisted in building six nuclear reactors with a total installed capacity of 3.4 million kilowatts, a Chinese official said last month. Beijing has also signed a memorandum of understanding with South Africa as well as Romania and Kazakhstan to explore the nuclear market.
Other than emerging and developing economies, China has also eyed developed ones.
In the United Kingdom, Chinese firms joined a project led by France’s EDF Energy in investing in Hinkley Point C, and are looking for more opportunities in the country. Just days ago, President Xi and visiting Prince William vowed to strengthen cooperation in the nuclear sector.
All these bode well for nuclear power-concept companies and their stocks. But it is not risk free. The biggest uncertainty is recurrence of any nuclear safety accident like the 2011 Fukushima disaster, not to mention the Chernobyl incident of 1986.
Any such accident, happening at home or abroad, will fan safety concerns and again bring the game to the ground.
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