China's nuke plan lures foreigners
By Zhu Boru (China Business Weekly)
Updated: 2004-05-17 09:06

During his recent three-day visit to China, US Vice-President Dick Cheney was said to have made a pitch for the technology of leading US nuclear power company Westinghouse Electric Co Ltd.

Westinghouse expects to sell four nuclear reactors to China, with an initial instalment cost of US$1.5 billion per piece.

"Clearly, the China market is very important to the industry and a supplier like Westinghouse," Vaugh Gilbert, a spokesman for Westinghouse's reactor vendor in Pittsburgh, was quoted by Associated Press (AP) as saying.

"The Chinese market is one that we are pursuing."

China will, by the end of this year, issue tenders for four nuclear power plants, with an installation capacity of 1,000 megawatts per piece.

And the winner of these deals is very likely to take an upper hand in future bids, said senior officials from the US nuclear industry.

Chinese officials estimate that by 2020 the country will need an additional installation capacity of 32,000 megawatts from the nuclear industry, or about 32 new reactors.

If such a deal is clinched with a US company, it could be a win-win solution for both parties, experts say. The move will bring billions of dollars in business, help narrow the huge US trade deficit with China - amounting to US$113 billion last year - and create thousands of jobs in the United States.

Meanwhile, China would be offered the new reactor technology, which, as a special category of technology export, has been under the strict control of the US Government.

China has given adequate assurances that such sales will not pose a proliferation threat, US officials were quoted as saying.

Westinghouse is putting its hopes on the 1,100 megawatt AP 1000 reactor, an advanced design that is still awaiting approval from the US Nuclear Regulatory Commission before it can be built in the United States.

The company, owned by the British nuclear firm BNFL, is the only US-based manufacturer of a pressurized water reactor, the type of design that China said it wants to pursue.

Westinghouse has a competitive rival, French company Areva.

Areva has had a long-term co-operation with China and is peddling its next-generation reactor built by its Framatome subsidiary.

It is believed that winning the first deal is vital to vendors, as China has indicated it will adopt a unified, standardized design across its nuclear industry and drop the existing combined technology of France, Canada, Japan and Russia.

"We would assume there would be more than one order," Gilbert said.

It costs less to build and maintain nuclear power plants with the same design, and this, meanwhile, offers better security. Vendors also can enjoy higher profit margins, said experts.

Moreover, "the opportunity is not just in selling the Chinese a number of reactors, but engaging them for a longer-term strategic partnership," said Ron Simard, who deals with future plant development at the Nuclear Energy Institute, an industry trade group.

That could mean future construction contracts as well as plants service business, according to AP.

The US nuclear industry has received no more orders from any US clients since the Three Mile Island nuclear accident in 1979.

Thus, US reactor vendors are relying on business elsewhere, especially in Asia, where fast-growing economies have generated new demand for nuclear power, AP reported.

US President George W. Bush also introduced US nuclear technology in January last year during his talks with Chinese Premier Wen Jiabao.

Although China and the United States signed an agreement on nuclear technology transfer in 1998, the United States has been holding on tightly to its export of high-tech products to China, and nuclear technology is particularly restricted.

French President Jacques Chirac and Canada's former prime minister, Jean Chretien, introduced French and Canadian nuclear technology respectively during their visits to China.

China currently has nine operating reactors, with a capacity of 6,450 megawatts, or 1.4 per cent of the country's total installation capacity of power plants.

Even with the surge in reactor construction, nuclear power will only account for 4 per cent of China's electricity output by 2020, analysts estimate.

In contrast, the average among countries with nuclear power plants is 17 per cent.

The prevailing power shortages in about two-thirds of China's provinces last year has propelled the government to more than double power generation by the end of 2020.

And to prevent further air pollution, the country is looking to shift from relying on coal-burning plants to nuclear power stations.

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