Guangdong and Fujian Take the Reins of China's Nuclear

UNCLAS SECTION 01 OF 03 GUANGZHOU 000086 SENSITIVE SIPDIS STATE FOR EAP/CM, EB/ESC, OES/ENV, INR/EAP; USDOE FOR OFFICE OF THE SECRETARY USDOE FOR INTERNATIONAL AFFAIRS USDOE FOR FOSSIL POLICY AND ENERGY STATE PASS TO NUCLEAR REGULATORY COMMISSION USTR FOR CHINA OFFICE BEIJING FOR FCS, ESTH AND DOE USDOE for Nuclear Energy/Miller, Lyons, Herczeg, Gillespie, McGinnis USDOE for NNSA/Baker, Black, Whitney, Huizenga, Bieniawski USDOE for PI/Sandalow, Yoshida, Cutler, Huangfu E.O. 12958: N/A TAGS: TRGY ENRG ETRD EINV PGOV TW CH SUBJECT: Guangdong and Fujian Take the Reins of China's Nuclear Renaissance REF: 09 Guangzhou 080 GUANGZHOU 00000086 001.2 OF 003 (U) This document is sensitive but unclassified. Please protect accordingly. Not for release outside U.S. government channels. Not for internet publication. ¶1. (SBU) Summary: Over one third of the total nuclear generating capacity set to come online in China by 2020 will likely be concentrated in two southern provinces: Guangdong and Fujian. Home of the nation's first nuclear reactors in Daya Bay -- which along with two units at neighboring Ling Ao power station account for 40% of China's current nuclear capacity -- Guangdong seeks to achieve a six-fold increase of capacity up to 24,000 megawatts (MW) by 2020. Fujian aims to build at least 10,000 MW in the next ten years, equivalent to 20-25% of the province's total energy needs. Overall, China plans to expand its nuclear power generating capacity from the current 9,000 MW to somewhere between 40,000 and 80,000 MW by 2020. Access to abundant coastal water resources, proximity to megacities and energy consumption hubs, the lack of indigenous coal resources, and stable seismic conditions are all factors behind the central government's plans to scale up nuclear capacity in these two provinces. A prominent nuclear scientist who returned to China from the United States in 2008 hopes that Fujian may become a center for nuclear research cooperation with foreign countries and possibly Taiwan. End summary. -------------- GUANGDONG SEEKS SIXFOLD INCREASE -------------- ¶2. (SBU) Of the 11 nuclear power reactors currently in operation on the mainland, four are located in Guangdong province, two at Daya Bay and two other one kilometer away at Ling Ao Phase I. The combined capacity of these reactors is 3,758MW, representing over 40% of China's total nuclear capacity. With ten additional reactors approved or under construction and eight more proposed, Guangdong �00A;should easily meet its objective of scaling up nuclear generating capacity by a factor of six to 24,000MW by 2020, according to Hu Guangyao, assistant director for general management at the China Guangdong Nuclear Power Corporation (CGNPC). Among projects approved and/or under construction, Hu explained to ESTHOff, CGNPC will build two more 1080MW reactors at Ling Ao Phase II, six 1080 MW units in Yangjiang and two 1700MW reactors in Taishan (reftel). Units currently in the proposal phase for Guangdong province include six 1000MW units at Lufeng and four 1250MW units in Shaoguan, an inland city. -------------- WHY GUANGDONG? -------------- ¶3. (SBU) Proximity and access to coastal water resources is a crucial factor behind the positioning of so many nuclear reactors in Guangdong province, a representative of CGNPC told ESTHOff during a January tour of the Daya Bay nuclear power plant. High levels of energy consumption in megacities like Guangzhou and Shenzhen combined with the scarcity of fossil fuel resources like coal and oil also combine to make nuclear a logical choice for Guangdong. Stable geological conditions, i.e. low levels of seismic activity, provide another justification for scaling up nuclear capacity in this province. -------------- -------------- NUCLEAR TO MEET 20-25% OF FUJIAN'S ENERGY NEEDS BY 2020 -------------- -------------- ¶4. (SBU) Endowed with similar natural and geographical conditions, GUANGZHOU 00000086 002.2 OF 003 Fujian has equally ambitious plans to expand its nuclear generating capacity. Starting from zero, the province aims to build ten reactors and bring 10,000MW of capacity online within the next ten years, according to Li Ning, Dean of Xiamen's School of Energy Research. With five reactors already under construction, Li predicted confidently that nuclear power will supply 20-25% of the province's energy needs within 5-6 years. Four 1080MW units are under construction or planned for the coastal city of Ningde while a total of six 1080MW reactors will be located in Fuqing, another coastal city near the provincial capital of Fuzhou, according to published reports. (Note: The World Nuclear Association estimates that Fujian's planned and proposed nuclear capacity will surpass 13,000MW by 2020. End Note.) Li also told ESTHOff that Fujian has been selected as the site for commercial demonstration of a fourth-generation 800MW experimental fast reactor, scheduled to break ground at the inland city of Sanming in 2012. -------------- WIND, SOLAR NOT RELIABLE SOURCES FOR FUJIAN -------------- ¶5. (SBU) As Fujian seeks to diversify its energy supply by moving away from reliance on fossil fuels, nuclear power stands out as a superior alternative to solar and wind, according to Li. One reason the province's investment to develop its nuclear capacity exceeds its investment in renewables is the weak potential of wind and solar power due to the relative shortage of natural sun and wind resources. The development potential of solar power, in particular, is also hindered by the lack of a regulatory framework that provides incentives for individuals to purchase solar panels, a point that was stressed at a meeting with a top manager at Fengwei Energy Technology Co. in Xiamen. The lack of direct government subsidies for individual purchasers is one challenge but the biggest obstacle is the inability for solar panel owners to realize a quicker return on their investment by selling surplus electricity back to the local power grid. Wind power has even less potential in the near to medium-term in Fujian, the manager said, which may explain the fact that only one wind turbine producer in the entire province - XEMC Datang Wind Power Company in Zhangzhou - is capable of manufacturing MW-class turbines. -------------- -------------- WESTERN STRAIT - FOCAL POINT FOR NUCLEAR DEVELOPMENT -------------- -------------- ¶6. (SBU) Li Ning of the Xiamen Energy Research Institute commented that the completion of ten nuclear reactors in Fujian by 2020 combined with the eight existing reactors in Taiwan will transform the Taiwan Strait into the focal point of China's nuclear development. In order to advance nuclear development in this zone, Li has proposed the establishment of a Western Strait Nuclear Power Technology Research Center at Xiamen University's new Xiangan campus. The goal of the research center would be to provide a venue for "high-level collaboration with elite research institutions and corporations both at home (China) and abroad." Li asserted that future U.S.-China nuclear technology joint demonstration projects should move beyond Beijing and Shanghai to cities like Xiamen. This would have the added benefit of assisting development of the Western Strait Economic Zone, which the central government has established in Fujian, and increasing nuclear cooperation with Taiwan, according to Li. (Note: Before agreeing to return to China to fill an "expertise gap" in nuclear technology, Li was associate director of the Lawrence Berkley National Laboratory in the United States. In addition to his current position at the research institute, Li also serves as director of Asian development for the Bill Gates-invested nuclear innovation outfit TerraPower. End note.) GUANGZHOU 00000086 003.2 OF 003 -------------- PUBLIC OPPOSITION STILL A CHALLENGE -------------- ¶7. (SBU) Hu of CGNPC told ESTHOFF that his company had encountered local opposition to the construction of the nuclear power stations proposed for Shaoguan and Lufeng in Guangdong province. Although he did appear reluctant to discuss it, Hu told us that under Chinese law nuclear companies like CGNPC must obtain local government approval before proceeding with a project. He pointed out that CGNPC had tried to increase public support for nuclear power plants by holding exhibitions to popularize nuclear science and by inviting residents of these cities to visit existing plants to assuage their safety concerns. GOLDBECK