By Bill Linton, Linton Consulting, and Jonathan Hinze, Ux Consulting
The story of nuclear power in Asia overall is one of consistency and growth for the first decades of the 21st Century. Japan, South Korea, China, and India have been leaders in nuclear construction and technology development. These countries have kept nuclear development active when it otherwise would have waned. In the future, these nations plan to be leaders in nuclear technology export as well.
In analyzing the outlook for near-term growth of nuclear power globally, it is no surprise that Asia will be the unquestioned leader. As we consider the drivers of growth, most Asian countries fulfill them all: rapidly developing economies, fast growing populations, high energy and electric power demand growth, relatively poor indigenous energy resources, and strong central governments.
With roughly 70 new plants under construction worldwide and 150-200 more in the planning stages in 2014, most of these new units are to be sited in China, India, and South Korea. These, and several smaller countries to be discussed below, are seeking to meet their high electric demand growth with a diversified generation portfolio that includes nuclear reactors.
However, Asia is truly a multi-dimensional region, and it is impossible to ‘broad brush’ the trends of Asian countries when it comes to nuclear. Consider, for instance, the differing attitudes, commitments, and plans of China, India, South Korea, and Japan. These are the largest countries from which to tell the story of nuclear in the region, and the view varies dramatically for each nation. Yet, to complete the story we must also address Indonesia, Malaysia, Pakistan, Bangladesh, Thailand, and Vietnam.
Historically, it could be said that Asian countries, especially Japan and South Korea, kept nuclear new build alive during the 1990s and early 2000s. This was a time when new nuclear construction practically stopped in the West. The trends of that time created the major vendors we still see today headquartered in those countries: Toshiba, Hitachi, MHI, Korea Electric Power Co. (KEPCO), Doosan, and others. It is also this history of nuclear technology development in the region that is now leading to the export ambitions of these companies. Thus, the role of Asia in determining the future of global nuclear power is destined to only grow in the coming decades.
|Two Westinghouse AP1000 reactors are currently under construction at the Sanmen Nuclear Power Station in eastern Zhejiang Province, China. Courtesy: Sanmen Nuclear Power Station
Nowhere is the future of nuclear power more evident than in China. However, it has not always been that way. As with its economic expansion, which only really accelerated in the 1990s, China’s nuclear power program was a bit of a late bloomer. Premier Li Peng, who by many is considered the “grandfather of the Chinese nuclear power program,” issued a dictate during his tenure for the country to promote reactor development. It was decided early on that pressurized water reactor (PWR) technology would be the primary reactor choice in China and the country would look to first import but then localize the technology in order to attain mass production. Two companies were given the permission to develop nuclear power: China National Nuclear Corp. (CNNC) and China Guangdong Nuclear Power Corp., which has now changed its name to China General Nuclear (CGN).
CNNC and CGN took slightly different approaches to developing their first nuclear plants. CNNC focused on the promotion of domestic reactor designs, which led to the first 300-MW unit completed at Qinshan Phase I in 1994. Some of the main components for this CNP-300 unit came from abroad, such as the reactor vessel manufactured by MHI of Japan, but CNNC rightfully claimed intellectual property to the design. CNNC doubled the size of this design to become the CNP-600, of which four are now operating and another two are under construction.
CGN, on the other hand, signed a contract in the late 1980s with France’s Framatome (now AREVA) for the construction of two 900-MW PWRs at the Daya Bay site. With financial investment by Hong Kong’s China Light & Power (CLP), the Daya Bay project saw its first unit completed in 1994. The relationship between CGN and AREVA has grown over the years and allowed for the near complete localization of the French PWR technology. The initial result of this was the CPR-1000 design, which is a standardized 1,000-MW PWR, of which nine are now operating and another 15 are under construction. AREVA is also building two EPRs with CGN at the Taishan site, which is likely to lead to the companies working together on EPRs in the UK and possibly elsewhere. Westinghouse is currently building four 1,100-MW AP1000 nuclear reactors, two each at the Sanmen and Haiyang sites in China. Operations are scheduled for 2015 and 2016.
In total, China now has 20 operating reactors for about 18 GW in capacity. There are also another 28 units under construction, which will bring the total capacity to 46 GW by 2019. There are numerous other projects on the drawing board, with upwards of 100 units potentially being added by 2030. Questions remain over the country’s ability to reach the government’s official target of 58 GW by 2020 as determined in a revamped plan after Fukushima, but the long-term expectation is that China will remain committed to rapid growth of nuclear power to satisfy extremely high energy demand coupled with clean air requirements. Given that the current and likely future level of nuclear power will still be far less than 5 percent of the total electricity mix, it is hard to underestimate the expansion capability in the country.
One of the main factors that will determine the role of nuclear power in China over the long-term is the location of the plant sites. After Fukushima, the government decided to only allow construction on coastal sites. If and when the ban on inland sites is lifted, this should allow for even more new projects to begin. Moreover, the selection of reactor technologies will be a critical issue, as the post-Fukushima safety requirements have made it impossible for CNNC and CGN to continue to rely on the previous Generation II designs. Advanced domestic designs are now being developed, but this process has caused a slowdown in near-term project starts.
A final factor that is being watched closely by many observers of the Chinese nuclear industry is the recent drive by many of the leading companies to expand into the international nuclear market. CNNC and CGN both have taken a stake in the Hinkley Point C project in the UK, and they have additional ambitions in Romania, South Africa, Argentina and elsewhere.
Over the coming decades, it is likely that China will help to shape the future of nuclear power more than any other country. Both in terms of domestic expansion of nuclear power capacities as well as the role of Chinese companies in the international marketplace, its position in the industry is destined to grow dramatically.
|Kyushu Electric’s Sendai nuclear power plant could restart in late 2014 or early 2015. Courtesy: Japan Times|
No country in Asia has received more attention about its nuclear power program over the past three years than Japan. However, it is important to put the Fukushima accident into perspective, especially as it relates to Japan’s history with nuclear power and prospects for the future.
Japan was the first country in Asia to develop nuclear power for peaceful purposes, beginning back in the early 1960s when the first reactor was brought online at Tokai. Japan’s utilities teamed up to import a number of western reactor technologies, including Westinghouse’s PWR and GE’s boiling water reactor (BWR). About half of the country’s utilities followed Tokyo Electric Power Co. (TEPCO) and chose BWRs, whereas the other half followed Kansai Electric Power Co. and chose PWRs. Thus, Japan is unique among the world’s major nuclear power users in that it has a high percentage of BWRs.
The real impetus for the rapid deployment of reactors in Japan was the Arab oil embargo of 1973, when the government realized that it was over-reliant on oil for electric power generation. From the mid-1970s through 2000, Japan built 47 reactors reaching a peak nuclear generating capacity of nearly 48 GW from 55 units in 2008 (roughly 35 percent of total power supply). Although the first of these units still relied heavily on foreign vendors, by the 1980s, Japan’s three major suppliers – Hitachi, Toshiba, and MHI – had completely mastered the relevant technologies. By the 1990s, Japan had become an exporter of critical reactor components.
Of course, the trajectory of nuclear power in Japan changed dramatically after the massive earthquake and tsunami of March 11, 2011. Five separate nuclear power stations were directly impacted by the natural disaster, but TEPCO’s Fukushima Daiichi plant, which housed six BWRs, was the most severely damaged leading to the partial meltdown of three reactor cores and multiple hydrogen explosions that damaged four of the units.
Since 2011, Japan’s public has become extremely skeptical of nuclear power, leading the government to become much stricter in its regulatory oversight of the industry. A newly created Nuclear Regulation Authority (NRA) has implemented very rigorous requirements on the remaining 48 operable reactors in the country, all of which have stayed offline for inspections and safety upgrades since 2012. As of August 2014, applications have been submitted for the restart of 20 units, and the NRA has already approved the restart of the first two units at Kyushu Electric Power Co.’s Sendai plant. If the final approvals go smoothly, Sendai 1 & 2 could be back in operation before the end of 2014.
With the reactor restart process now somewhat clearer, the main question relates to the long-term usage of nuclear power in Japan. Many of the country’s reactors are approaching their 40th year of operation, and there is uncertainty over whether the NRA will allow plants to operate beyond that. Moreover, several nuclear plant sites are being evaluated for possible earthquake faults, and this could doom some of the existing plants. Meanwhile, there are still two reactors in Japan under construction – Shimane 3 and Ohma 1 – and many believe that these will be allowed to be completed. As such, it is still too early to tell how many reactors will continue to operate in Japan over the long-term, but it would seem likely that somewhere between 30 to 40 units could remain on the grid for the coming decades. Nevertheless, if Japan’s public remains largely opposed and the country’s leaders are unwilling to push through a strong pro-nuclear agenda, it is possible that the total amount of power from nuclear will slowly decline after 2020.
Japan is a highly advanced economy but has nearly no domestic sources of energy. The total cost of replacing the currently offline reactors is estimated to have run over $100 billion since 2011. These costs will only continue to rise, along with carbon and other air emissions, if the nuclear plants are not returned to service for the long-term. Many politicians, including Prime Minister Shinzo Abe, fully understand this reality. The difficulty for Japan’s government will be in convincing enough of the public that nuclear power remains a necessary option for energy supply despite the risks.
The Republic of Korea (ROK) or South Korea, has been a unique growth story for nuclear power. Not only has in-country nuclear construction continued throughout the time when North America and western Europe did not grow, but also technology advancement and a government-level commitment to export has propelled ROK into an emerging position in the global nuclear industry, challenging rivals in several countries.
Today, South Korea’s 23 licensed plants comprise a strong nuclear industry that has a good safety and reliability record and operates at high utilization rates. The majority government-owned KEPCO owned all of the fossil, nuclear, and hydropower operating plants until a few years ago when restructuring occurred. As its nuclear industry has developed, South Korea has been growing a strong and highly self-sufficient nuclear supply chain. Companies such as Doosan Heavy Industries are able to provide large forgings and many other components required by its industry.
The government sees the potential for nuclear power technology to provide for the country’s energy needs as well as a growing export. South Korea’s vibrant economy has seen electricity consumption growth rates that have exceeded 8 percent for some years and are expected to continue in the 2.5 percent range through 2020. Revised government targets see some 29 percent of generation from nuclear by 2035. It will take another 20 units to meet that target in addition to the five to six projects underway today. Because real estate is at a premium, the policy is to add additional units at existing sites.
KEPCO’s success in winning the competition for the United Arab Emirates’ first four units in 2009 should also be noted. These are expected to be the first of many anticipated units to be constructed in the Middle East in the coming decades. Its APR1400 is now considered a leading design for the future in Asia, as well as other global locations.
Between 2012 and 2013, serious safety and certification issues surfaced in the South Korean nuclear industry. At least five plants were taken offline to replace components that did not meet quality standards. The resulting shutdowns for investigation and replacement of components created electric power shortages through a serious summer heat wave with harsh results. As of mid-2014, South Korea seems to have concluded this negative chapter in its nuclear history and is renewing its development activities both inside and outside the country.
|The 1,000-MW Kudankulam Unit 2 is on track to begin operations in November.|
The Republic of India, the world’s second most populated country and largest democracy, is an important nuclear country, both as a weapons state and generating a significant amount of nuclear power. While the country today operates 21 nuclear power plants and has six under construction, it is making plans for many more. India’s energy policy calls for 25 percent of electricity to be generated from nuclear by 2050. This will be an enormous challenge, but India is a vast and rapidly growing country.
India’s nuclear power industry is completely owned and run by the federal government. Operating organizations include Nuclear Power Corporation of India Limited, Department of Atomic Energy, and the nuclear regulator, the Atomic Energy Regulatory Board. The six reactors under construction total over 4 GW and have startup dates between 2014 and 2016. The new Modi government is targeting 17 GW by 2022, a more conservative target than the previous administration wanted, but still a huge leap.
Today, the country has a significant lack of electric power generation capacity to meet demand. Brownouts and rolling blackouts for load shedding are a regular occurrence in many parts of the country, often in the evening between 5 and 10 PM. Because of its strong growth rate and rising standards of living, continued high demand growth for electric power is forecast. But, because of the need to diversify away from coal (now some 70 percent) and to clean up the environment, nuclear and hydropower are favored.
India will struggle to meet its generation growth targets and improve its electric supply reliability. Investments on the order of $40 billion have been identified, including every form of generation and significant improvements in the electric power grid. More recently, some have even put the investment required as high as $85 billion for nuclear.
Bringing in outside technology and assistance will be necessary if India is to meet such aggressive growth targets. For these reasons, the country is now looking more to the outside world for modern nuclear power technology and, where available, for investment capital. Talks are ongoing with Rosatom, GE, Westinghouse, AREVA, and possibly others.
The recently completed Kudankulam 1 reactor is the first of two to be brought on line. It is a Russian VVER-1000 design and brings the number of operating reactors to 21. Kudankulam 2 is also under construction and Units 3 and 4 are in planning, but not yet started. The majority of new reactors under construction are domestic pressurized heavy water reactors (PHWRs), which are now in the 700-MW class. R&D on a larger PHWR domestic design of 1,000 MW is also reportedly underway.
India’s national policy favors nuclear power as a growing share of total generation planned to be 25 percent by 2050. India’s own heavy water technology developed during its two decades of isolation is a source of national pride. While most do not want to see its local technology pushed aside, it will be important to bring in more outside vendors if the nuclear program is to be modernized and growth challenges met.
Yet, India has one of the most stringent liability laws of any country. Perhaps it was the memory of Bhopal that led the government to pass this law. This liability challenge has become a common complaint of global suppliers as they look to enter India. We must watch the progress over the next few years to see if both internal and external investments will be made quickly.
As one of the few non-signatory states to the Nuclear Nonproliferation Treaty, Pakistan has remained outside the reach of the international commercial marketplace. However, this has not stopped the country from developing nuclear power, as it currently operates three reactors – one small CANDU unit imported from Canada in the early 1970s and two CNP-300 units from China. China’s CNNC is now building two more of these 300-MW units at the Chasma site, and there are plans to build a larger 1,000-MW advanced CNNC design at the Karachi site. Pakistan is wracked with shortages of electricity, and the country desperately needs energy to foster economic development. Given these realities, the country will continue to look to China, the only reactor exporter willing to do business in Pakistan. Beyond the basic commercial considerations, the benefit for China to building in Pakistan is that it offers a relatively amenable test bed to prove its capabilities as a full-fledged nuclear exporter.
Taiwan’s history with nuclear power dates back to the 1970s, when it first imported two BWRs from GE. As an island with a rapidly expanding economy and few domestic sources of energy, Taiwan turned to nuclear power to provide nearly 20 percent of its electricity for the past three decades from six reactors at three nuclear power plants. A fourth nuclear power station at Lungmen has been under construction since 1999; however, the project has been challenged by changes in the domestic political situation over the past 15 years. There is a strong anti-nuclear movement in Taiwan, and this antagonism has grown since the Fukushima accident. Major protests in the spring of 2014 led the current government to mothball the Lungmen project for the time being. Unit 1 of the two GEH advanced boiling water reactors (ABWRs) has completed pre-operational testing but was recently sealed and could remain so for another three years. Construction on Unit 2 has been halted. The government is now preparing for a public referendum to decide the fate of the Lungmen project. If protestors get their way, the country could be completely nuclear-free by 2030. At the same time, without many good options for replacing this power, there are many in Taiwan who are still hopeful that opinion will shift again in support of nuclear.
Apart from the existing nuclear power countries in Asia, there are numerous others that are interested in developing this power option for the future. Of these potential newcomers, there are only about a handful that can be considered serious contenders. The most advanced in terms of developing a nuclear power and regulatory program are Vietnam, Bangladesh, Malaysia, Indonesia, and Thailand. Other nations, such as Philippines, Singapore, Mongolia, and Cambodia, are either much further out in their preparation or have decided against pursuing nuclear after weighing their options.
Vietnam is perhaps the most intriguing story pertaining to nuclear newcomers in Asia. As a country with a fast growing economy and a population hungry for a modern, energy-intensive lifestyle, Vietnam’s government approved a plan in 2011 to commission ten reactors by 2030. To reach this goal, a contract has already been signed with Rosatom to build two units, and negotiations are continuing with Japanese vendors for another two-unit plant. Meanwhile, Vietnam recently concluded a 123 Agreement for nuclear cooperation with the U.S., which could open the way to future exports as well. Financing nuclear plants remains a challenge for Vietnam, but there is a strong will and need for nuclear power development.
It is clear that the growth story for nuclear in the foreseeable future will mostly focus on Asia. That is where the factors of population growth, energy and electric power demand, and favorable government policies are converging to make a diversified generation mix a necessity.
As we look back a decade from now, Fukushima, while it has seriously affected nuclear power in Japan, may prove to be only a brief pause in the development of the nuclear growth of Asia. While it has negatively impacted the industry worldwide, Fukushima will by no means halt, or even slow, the growth of new nuclear power overall in Asia.
Meanwhile, the Asian growth story will not just be centered on the domestic expansion, because a number of Asian countries already have well-developed nuclear supply chains, globally recognized reactor designs and leading vendors and suppliers. Countries like Japan, South Korea and China are likely to remain or become world leaders in nuclear power and their influence will be felt worldwide.
Jonathan Hinze is Senior Vice President, International for Ux Consulting (UxC), where he is responsible for a variety of consulting products. With over 13 years of direct experience in the nuclear industry, his main areas of focus are global nuclear power developments and their impacts on nuclear fuel demand and the reactor supply chain. UxC is global leader in consulting and information services for the nuclear markets.
Bill Linton is Principal of Linton Consulting, a UxC partner and professional practice that is active in energy, power, nuclear, process and manufacturing. Linton’s ongoing Strategic View process has focused on nuclear for over 5 years.
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