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China’s Foray into World Nuclear Power Market

China now seems very confident of exporting its latest design nuclear reactor known as CAP1400 capable of generating 1400 MWe. It has come a long way since the only previous export, which is of its first indigenous plant of 300 MWe capacity to Pakistan in 1985. But this latest version belonging to Generation III is based on technology acquired from Westinghouse. Interestingly, Westinghouse is also involved in its development by China.

Turkey is the most recent addition to the countries China hopes to export this reactor. This is evident from the visit of the Turkish Prime Minister Erdogan to Beijing a few days ago on April 9, the first such visit from Turkey in 27 years. The main object of the visit seems to be to seek China’s assistance in setting up a second nuclear power station in Turkey which will be on the Black Sea coast in a place called Sinop. A standard agreement on nuclear cooperation was signed with Wen Jia Bao, but there is more to it. China is believed not to be seeking any financial guarantees and seems willing to offer its latest design. This works out to be cheaper than what the competitors have to offer and would help China establish a wider global presence. Turkey’s plans include a third nuclear power station and China could land that as well much to the delight of the Chinese nuclear industry circles.

Chinese manufacturers have already begun supplying equipment for reactors in France. They have also begun indigenous manufacture of some key safety related cooling systems for the smaller Westinghouse reactors of 1000 MWe capacity known as AP1000 currently under construction in China. China is presenting their larger cousin CAP1400 as a wholly indigenous one. The technology transfer agreement with Westinghouse allows China to export it without any restrictions on account of intellectual property considerations. However, China plans to begin construction of the first unit of this version on its soil, only next year. But, several AP1000 reactors are now under construction in various provinces. The first of these is expected to be commissioned next year. India too had planned to order these reactors from Westinghouse for two of the proposed new sites.

Turkey’s interest in nuclear electricity generation dates back to the 1970s. Since then, tenders were floated on several occasions without success. It was only in 2010 that Turkey finalized a deal with Russia to build the first nuclear power station in Akkuyu on the Mediterranean coast. The station is to have four units each of 1200 MWe at a total cost of US$ 20 billion. Rosatom, the Russian firm will build, own and operate the station, an arrangement that is the first of its kind in the world to have progressed from conceptual to implementation stage for establishing a nuclear plant. Turkish power distributing firm will buy 70% of the output at an agreed rate for 15 years after which Rosatom can sell the generated power in open market but will have to pay 20% of the profit to Turkey. Rosatom is expected to train Turkish staff free for operation of the reactors. Wen Jia Bao had visited Turkey in 2010, but at the time negotiations were reaching the final stage between Turkey and Russia. The visit ended with an agreement to raise bilateral trade to US$ 50 billion by 2015 and double it over the next five years.

The Akkuyu project has just commenced and Turkey is planning the second power station on a similar ‘build, own, operate’ basis. Several offers were received among which Korea and Japan showed keen interest to garner the contract. Korea was confident after having won the UAE contract earlier on lowest cost basis beating the French and the Japanese. Failure in UAE, seemed to have made Japan determined to win the Turkish contract, but Japan decided to withdraw after the Fukushima accident. Korea too gave up because of differences on the power purchase guarantee. The condition that the reactor supplier should take back spent fuel may have been another reason. It is also believed that Turkey expects the supplier to undertake decommissioning of the reactor and arrange for waste disposal eventually.

It is in this context that the Turkish PM undertook the journey to China. Significantly, Turkey is celebrating a ‘Year of China” this year and this will be followed by China observing a “Year of Turkey” next year. The build, own, operate arrangement is attractive for countries without requisite financial resources for utilization of nuclear power, but it is not without problems. One of these relates to the need for extensive and continuing training for operating staff, which in the case of Russian and Chinese suppliers would be in a foreign language. It is not clear how good the arrangements for training of foreigners in China are. The Chinese themselves have launched a training program for their nuclear scientists and engineers with the help of France by establishing an Institute in Gwangdong to train 100 of them over the next five years. The program is piloted by Grenoble Institute of Technology in France and the training is said to be in French. France contributes half of the budget for the program. Perhaps, these trainees are intended to work mainly in the reactors in China that are based on French design. There are quite a few of them.

There is another and trickier issue in allowing a foreign entity to own and operate nuclear reactors. It relates to assigning clearly and to mutual agreement, the responsibilities of that entity for civil nuclear liability. China has also signed a nuclear cooperation agreement with Saudi Arabia. This happened during Wen’s visit to Riyadh in January this year. With Saudi Arabia’s plan to diversify from oil to nuclear power and willingness to spend US$ 100 billion over the next 20 years for the purpose, it opens up for China lush possibilities of more sales of nuclear reactors. The condition that spent fuel must be taken back may work in China’s favour by providing a source of plutonium for its planned fast reactor program.

The South African plan for a new nuclear power station would provide China yet another export opportunity to explore. Preliminary studies had shown a preference for the earlier Chinese design of CPR1000 that is based on the French design that China had procured. China’s agreement with France does not allow it to sell these reactors to other countries. Besides, indications are that after the Fukushima accident, as in many countries, South Africa’s interest is in a Generation III design with enhanced safety features. China’s CAP1400 then becomes an automatic choice.

There is great expectation among Pakistani sources of further supply of reactors by China. There are now two small Chinese reactors in operation in Chashma and two more similar ones are reportedly under construction. There are no definite indications from China of any additions to these as of now although Pakistan continues to seek them. One should not be surprised if the idea on the part of China is to build CAP1400, the advanced version free from intellectual property issues.

China has limited experience in the operation of nuclear reactors at home and even less of it in exporting reactors of its design. Nevertheless, there are now hopes of selling reactors to many countries and China seems to be fairly certain of a large share of the future market in nuclear power.

India is the only country to have refrained so far from attempts to export its reactors despite having fully indigenous expertise in all aspects of the nuclear fuel cycle from uranium mining to disposal of high level waste. The heavy water reactors it builds do not need enriched uranium and make the best use of natural uranium. They have a cost advantage as well. They render the management of spent fuel easier because of much lower radioactivity content. They are also simpler to decommission. But, India is not getting any marks for its restraint. That said, it must also be noted that India cannot offer assurance of uranium supply. Neither is it likely to take back spent fuel.

(The writer, Mr L.V.Krishnan, is former Director- Safety Research Group, Indira Gandhi Centre for Atomic Research, Govt of India, Kalpakkam, Tamil Nadu,India. Email:krishnan97@gmail.com)

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