China’s Nuclear Power Sector: What It Is and What It Is Not (Yet)

China’s recent, rapid expansion of its domestic nuclear power generation fleet sets it apart from most, if not all, of nuclear power-dependent economies around the world that have seen the zero-carbon source of electricity come under economic or social pressure. Only a few weeks ago, the fourth and the last of U.S.-designed AP1000 rector project units China had embarked on a decade ago came into commercial operation in Shandong province. Indeed, between 2012 and 2018, China added the most nuclear power capacity in the world, strongly aided by its government promotion of nuclear power as a crucial tool to combat the grave air pollution the country faces. China has 42.8 gigawatts (GWe) operable net nuclear capacity today, making its fleet the third largest in the world behind France (63.1 GWe) and the United States (99.3 GWe). According to the Chinese government targets, China’s installed nuclear capacity would reach 58 GWe by 2020, and 120-150 GWe by 2030, overtaking France within a decade, and the United States by 2030.

Yet, the best predictor of future performance of China’s nuclear power sector may not be its past. Several social and economic challenges are emerging to cast a cloud over the turbo-charged expansion. Thanks to the 18-month long moratorium on new construction approval following the Fukushima nuclear accident in Japan and the attendant tightening of nuclear safety regulations, however, it appears highly unlikely that the country can bring another 15 GWe online in time to meet its 2020 target. Also, whether China can more than double the current capacity by 2025 is doubtful when no new reactor construction has commenced since December 2016 although roughly 11 GWe of additional capacity is currently under construction. The growing public acceptance challenge has been hindering new project siting, especially in China’s inland, as little room is left for new projects in its power-hungry coastal regions. Moreover, the country’s power market reforms increasingly render the commercial viability of nuclear projects uncertain even in the country some nuclear advocates may view as a nuclear nirvana as the reforms complicate nuclear state-owned enterprises’ ability to retain the price levels sufficient to generate revenue to service their growing debt. Additionally, the levelized costs of electricity (LCOE) from wind (onshore) and solar are generally lower than the LCOE for nuclear in China today, according to a BloombergNEF report from 2018.

All these factors casting uncertainty over the scope of China’s nuclear expansion at home could intensify the country’s export drive as the Chinese nuclear industry tries to mitigate the excess manufacturing capacity. This development may signal that China’s nuclear sector may sooner rather than later undergo the familiar experience among the Western vendor countries of the domestic stagnation propelling aggressive export drive. For example, the ongoing challenge to bring AP1000 projects online at home, combined with the economic struggle of the existing fleet have exerted significant pressure on the U.S. nuclear sector to aggressively pursue export opportunities in the recent years, including in some countries without nuclear power generation that are also politically contentious. Likewise, Japan had sought to launch global projects as a means to uphold the domestic supply chain in the face of slowing domestic nuclear power demand, but it recently encountered a series of setbacks, including Toshiba’s decision in November to withdraw from the NuGeneration project, and Hitachi’s decision in December to freeze its Horizon project, both in the United Kingdom. Moreover, South Korea has seen several APR1400 new builds come online at home in the recent years, but it is now in a bind to comply with South Korean president Moon Jae-in’s decision to cancel future reactor projects and to prohibit operational license renewals for current plants. As exports are still allowed by the Moon administration, the Korean nuclear sector is under heightened pressure to land overseas projects, hoping to replicate its successful 2012 bid for the Barakah project in the United Arab Emirates (although it has not commenced commercial operation due to some issues associated with operational preparedness and quality control).

Moreover, China is not to be conflated with Russia when it comes to the ability to export nuclear goods and services. The two countries are often mentioned almost interchangeably as a force of challenge to Western reactor suppliers that lack the type of financial and diplomatic support enjoyed by non-Western exporters. Indeed, China has a strong export ambition that is currently matched by government support, low construction cost, and a strengthening supply chain. However, unlike Russia, China to date has no export “track record” to speak of. China positions its Hualong One (HPR-1000) reactor design to be the key for its rising global stardom and has been actively pursuing deals to build it in Argentina, Romania, and the United Kingdom. The country’s only concrete overseas accomplishment has, however, been in Pakistan. Meanwhile, six of the ten recent nuclear projects that have come online were built by Russia, including in Bangladesh, India, and Turkey. In fact, it could take a decade before Chinese exports start rivaling that of Russia and the West. Yet, a decade is not a long time as nearly anything to do with nuclear typically requires a long lead time, especially in the West.

Jane Nakano is a senior fellow with the Energy and National Security Program at the Center for Strategic and International Studies in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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Jane Nakano
Senior Fellow, Energy Security and Climate Change Program