5 Key Challenges Facing China’s Nuclear Industry

China has made great achievement in the past few decades developing its nuclear industry. In the meantime there are 5 key challenges China is facing which is preventing China from becoming a superior nuclear country.

1. China’s Slowdown on Energy Demand

From 2013 to 2014, the growth of total generating capacity in China was only 3.8% compared with 13.2% in 2010, which reflects a significant slowdown of China’s energy demand. A spokesman from National Energy Administration said that the total generating capacity in China is expected to reach 11,200 billion kWh in 2030 which will be the peak of the capacity.

The reason is due to multiple aspects. Firstly, China is undergoing its period of Economic Transformation. High electricity consumption industry which is mostly known as heavy industry only increased 3.5% in 2014 while other industry increased 9.7% the same time. As the government put more determination on controlling the large pollution, the future development of heavy industry in China couldn’t be very optimistic. Secondly, Because of the One-Child Policy, most experts believe that the population of China will start to shrink in 2020s. This fact will also cause the decrease of energy demand in the country.

Nuclear power plant is a very long term program from a plan to commercial operation, usually longer than 10 years. Therefore, when the expectance of future energy demand is uncertain or depressing, that will be a big challenge to develop a nuclear program.

2. Lower International Recognition of the Technology

In 2009 the Emirates Nuclear Energy Corporation announced that it had selected a bid from the KEPCO-led consortium for four APR-1400 reactors, to be built at one site. This $20 billion contract between South Korea and UAE shocked the world nuclear industry. The brand of South Korean nuclear industry started becoming recognized. However, the only one time China’s nuclear industry playing in a foreign country till now is in Pakistan, yet which has not run a bid for the program. Even though China has already had its own nuclear reactor technology, just like other Made in China, people need time to prove China’s nuclear technology is as trustful as e.g. France’s and America’s.

2015 is the good start for China’s nuclear technology going outside the country. As China’s first fully owned intellectual property right reactor technology, Hualong-1 is becoming a hit word this year since China put it on the top position of the technology export plan. On June 2015, China signed a contract with France that EDF will develop the nuclear program in UK together with China including provide assistance for China building Hualong-1 in UK. The first Hualong-1 unit commenced to be built in Fuqing Nuclear Power Plant which is expected to start operating before 2020. All we need is time to see if China can do better in global nuclear industry.

3. Public Protests

2013 in Jiangmen, 50 km away from Taishan Nuclear Power Plant, a construction site of nuclear fuel processing factory was abandoned because of the resistance from local residents. The same as most countries in the world, the voice of anti-nuclear is always exist in the public. The reason firstly comes from lack of relevant education, most people don’t know anything about nuclear but those disasters in Chernobyl and Fukushima. Thus the time they see the word “nuclear” they will always relate it to radiations, nuclear leakage, and nuclear bombs.

Actually, nuclear energy is much safer than people think. The world accident rate of a 2nd generation reactor is only 0.157% by accumulative statistics, of which most of the accidents are under level 3 that means non-lethal deterministic health effect (e.g., burns) from radiation.

Therefore, the challenge is how the country can positively promote its nuclear industry to increase public acceptance.

4. Nuclear Industry with Chinese Characteristics

China’s nuclear industry is maintained by three major state-owned corporations, China National Nuclear Corporation (CNNC), State Nuclear Power Technology Corporation (SNPTC), and China General Nuclear Power Corporation (CGN). The obvious advantages for a state-owned company is abundant financing and supportive policies. But it causes inefficiencies as well.

The first is redundant team.  For example, there are over 20,000 contract employees in CGN, of which only 5.4% work on technology research and development field. Many people are appointed in the department of Culture and Publicity, Ideology Guide, and Party’s Work. Another malpractice is disadvantageous industrial distribution from the company’s perspective. To keep the balance of development among different regions, the government intentionally distributed the industry into different places. Some nuclear research centres are located in west part of China where the quality of life and economic level is relatively lower than China’s coastal cities. It is unlikeable to be the ideal job location for most Chinese students. Besides, while CNNC and CGN were working together on Hualong-1, inconvenience caused many inefficiencies in the work because of different locations of these two companies. In addition, as China is learning nuclear technology from other countries, absorbing multiple technologies also make it challengeable to China’s nuclear industry. Although the major’s title is “Nuclear Engineering” all the same, student from different universities studying different nuclear technologies.

The appeal of reforming the state-owned companies to enhance their domestic and international competitiveness is becoming stronger and stronger. The government has also showed its determination to change and face the challenge.

5. Competition with Other Energy

Since last month, Japan’s nuclear power plants started resuming to operate after 4 years shutdown. Because of the short of resources, Japan was suffering a tough energy dilemma by relying on imported fossil fuels, which urged Japan to restart its nuclear power plants (nuclear provided 30% of energy in Japan before the Fukushima disaster).

But the situation in China is totally different. China produces the most coal in the world which takes 49.5% of the global production. In 2012, the electricity generated from coal in China is 78.5%. Although the government encourages to develop nuclear energy, coal energy will remain on its dominant position in the next few decades because of its lower cost and its easier-mastered technology. Besides, like the Three Gorges Dam providing abundant power for east and south China grid and the utilization of geothermal energy in Tibet, the development of renewable energy in some certain region could also influence the development of nuclear energy.

The final target of nuclear energy is provide 20% of total electricity consumption as it is stated in China’s development plan. Hence, the challenge from the competition with other energy is always existing but limited.

China is accelerating its development of nuclear industry, while these are the challenges that the country has to face with. Today, China has handed in a satisfying result to the world which I have introduced in my previous posts. Hence, I believe and expect that China can find its way to improve and make difference to the global nuclear industry.

Do you agree?

China’s nuclear industry will be discussed during the 4th edition of Asia Nuclear Business Platform which will take place 18-19May 2016 in Hong Kong.