China's Tenders for Four Nuclear Plant Package Offer Winner Construction and Technology Boom Through 2020

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Researched by Indistrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). At the beginning of September, Zhang Huazhu, head of the China Atomic Energy Authority, said that two or three 1,000-MW nuclear power plants would have to be established in the country each year through 2020, in order to achieve the goal of a total nuclear power capacity of 36,000 MW in the next 15 years. At the end of July this year, China had nine operating nuclear power plants, with a total generating capacity of 7,010 MW.

The date for the issuing tenders for a batch of four new nuclear power stations is said to be imminent, with Westinghouse Electric Co (Monroeville, Pennsylvania) (BNFL, UK state-owned), Areva (PARIS:CEPF) (Paris, France) and state-owned AtomStroyExport (Moscow, Russia) (ASE) said to be the final contenders in what constitutes China's first bidding round for nuclear power projects open to foreign companies. In addition to the three frontrunners, Mitsubishi (TOKYO:7011), Alstom (PARIS:ALS), and state owned Atomic Energy of Canada (Mississauga, Ontario) have also been jostling for a part of the action.

The competition for this packaged batch of contracts is particularly keen, as the Chinese authorities have indicated that a unified, standardized design across the nuclear power industry will be adopted, and the use of the combined technologies of France, Canada, Japan, and Russia will be dropped. Winning this contract will represent a very large foot in the door of China's nuclear power industry for the next fifteen years and more.

With reference to the operation of the spate of new power plants, Zhang said that after 20 years of practice in the nuclear power field, China had developed its own management system and cultivated a group of talented professionals with high ability to design and build equipment independently, which provides a good basis for future faster development of China's nuclear power industry.

Yu Jianfeng, a director of China National Nuclear Corp. (CNNC), told the China Daily in mid-September that the tender documents and proposals had already been approved by the State Council and had then been presented to the National Development and Reform Commission for final approval.

The winner will be in charge of the design and construction of the four power plants, of which two will be in Sanmen in east China's Zhejiang province and two in Yangjiang in south China's Guangdong province. It is estimated, but not officially confirmed, that the four-plant contract could be worth up to $8 billion. The long-term prospects for the winner can be seen in the Yangjiang project plant site, which by 2020 is scheduled to have a total power output of 6,000 MW from six generating units, with the first two being commissioned in 2010.

The CNNC is looking to adopt the latest third-generation pressurized water reactor technology, which it has been unable to develop from its own industry resources. Yu said that the designs offered should be cost-competitive regarding both construction and operation and that the price of nuclear-generated power should be only slightly higher than that from thermally-generated power. He felt the winner would come from the three frontrunners.

Westinghouse Electric (WE), as a U.S.-based company, finds itself able to bid for Chinese contracts, since a number of prohibitions, sanctions, and export controls on the export of nuclear technology from the U.S. to China have been removed over the past few months. Chinese Vice President Zeng Qinghong outlined China's coming nuclear power boom to visiting U.S. Vice President Dick Cheney in April 2004. Cheney is said to have pitched for WE and the rest of the U.S. nuclear power industry, which is hungry for new plant construction work, since the U.S. has 104 operational reactors and no new projects under construction. Winning the deal for WE would help to narrow the 2003, $113 billion U.S. trade deficit with China. WE is said to be promoting its 1,100 MW AP 1000 reactor, which has a 48-month construction period, somewhat shorter than the average 60 month span.

Areva, which has the advantage of past and current projects in China, has also won the contract to build a third-generation reactor, the European Pressurized Reactor, in Finland, which is seen as the pioneer for a number of plants of the same technology worldwide, and is claimed to be cost competitive. The company has also supplied technology transfer to nearly 20 Chinese companies, which is in line with the CNNC's quest for a cooperative building deal. No specific comments about its chances have been made by AES.

Even with the surge in reactor construction, nuclear power will contribute only 4% of China's electricity output by 2020. This figure is far below the 17% level, which is the average among countries with nuclear plants in their power generation mix.