Last week, China took a giant step toward its ambition to be the world’s top builder and exporter of nuclear power stations.
At a major ceremony in London on Thursday, government ministers from China, Britain and France attended the signing of agreements to start work on the Hinkley Point nuclear power station in southwest England, at a cost of 18 billion pounds (US$23.12 billion).
China General Nuclear Corp. (CGN) will finance and own a third of the project.
Even more important for CGN was the inclusion in agreements for two more nuclear plants in England to be built by it and Electricite de France (EDF), the lead contractor in Hinkley Point.
The two are Sizewell C, in which EDF will hold 80 per cent and CGN 20 per cent; and Bradwell B, in which CGN will hold 66.5 per cent and EDF 33.5 per cent.
Bradwell B will use the Chinese third-generation technology Hualong One, now employed at the Fangchenggan Phase II station in Guangxi.
CGN chairman He Yu said his company would submit the Hualong One design to the General Design Agreement (GDA), the British government regulator for nuclear technology, with a view to getting approval within five years and would use this technology at Bradwell B.
“Once Hualong One passes GDA, it will boost more countries’ confidence and push forward Hualong One’s global market development,” said He.
It would be the first Chinese-designed nuclear power station in a developed country and be a critical step in its aim to become a global exporter.
China has 35 nuclear reactors in operation and 20 under construction.
It plans to double its nuclear capacity from the present level to at least 58 GWe (gigawatts of electrical output) by 2020-21 and then 150 GWes by 2030. CGN aims to generate 15 per cent of its revenue from abroad by 2020.
Last September, China signed a memorandum of understanding with the government of Kenya on the construction of a Hualong One project. In December, it signed an agreement with Thai utility Ratch to invest in the second phase development of its Hualong One nuclear project in Guangxi Zhuang autonomous region, which it hopes will pave the way for a future Hualong One project in Thailand.
In late 2014, it won a bid to build a nuclear project in Romania using Canadian reactor technology.
Worldwide, less than a dozen companies build large nuclear power plants.
They are extremely capital-intensive and need a long time to repay the initial investment.
Public opinion in developed countries is skeptical, if not hostile, to nuclear energy after accidents such as that at Fukushima in Japan in March 2011.
This makes private capital increasingly reluctant to invest in this sector.
All this plays to the strengths of CGN, which has the full backing of the Chinese government as a priority industry and earns most of its revenue from the plants it operates at home.
This gives it abundant financing to compete for foreign projects.
The final hurdle it must overcome is confidence in its technology, the issue now to be addressed by GDA of Britain.
The signing in London last Thursday was a landmark for China, its entry into the elite club of nuclear operators in the developed world.
In attendance were the British Ministry of Commerce, the French Foreign Minister and China’s Energy Minister, in addition to He Yu of CGN.
China’s satisfaction was the greater because the new government of Theresa May had in July suspended a decision on the project, to allow time for further security and financial review. China’s Energy Minister was at Beijing airport, ready to board his plane for London for the signing; he had to abort his journey.
Liu Xiaoming, China’s ambassador to the United Kingdom, wrote an angry letter to the Financial Times, saying that, if the project did not go ahead despite years of negotiations and studies, it would threaten future co-operation between China and Britain.
On Sept. 27, he hosted a large reception in London to mark China’s National Day. It was attended by at least three members of the British Cabinet.
“When Chairman Xi Jinping visited Britain last October, it marked the beginning of a ‘golden era’ between the two countries,” Liu said.
“Then Brexit occurred, the administration changed and many unexpected changes happened. I am very happy that the British government approved the Hinkley Point project. Chinese firms will continue to be enthusiastic about investing in Britain.”
The reception and the signing were vivid evidence of China’s industrial and financial power in Britain, even stronger after Brexit, which leaves the status of its commercial relations with many important trading partners uncertain.
How much did this China factor weigh in the final decision of Theresa May?
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