China's nuclear power capacity is expected to see steady annual growth of 7% -- higher than its peers in Asia -- driven by policy certainty, relatively high social acceptance and cost-effectiveness, Wu Yuehao, Director with S&P Global Ratings, said at a webinar on Asia-Pacific Credit May 10.
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Nuclear power is seen as a low-carbon and low-cost alternative in China's energy transition, and its role has become increasingly important amid surging gas prices due to the Russia-Ukraine conflict.
China's energy policy is leaning toward strong growth in nuclear, in line with several European countries where it has assumed greater importance with the diversification from Russian oil and gas.
Even in Asia, South Korea's new President Yoon Suk-yeol won the March election on a platform of giving nuclear power greater priority in the country's power mix as it looks to ditch coal-fired power generation and gas-fired power is exposed to the turmoil in global markets.
In China's latest 14th Five-Year Plan (2021-25), the government called for a nuclear generation capacity expansion to 70 GW in 2025. S&P Global Commodity Insights projected the nation's nuclear generation capacity to reach 145 GW in 2035 -- more than double the 2025 target level.
"I don't think China is prioritizing one [type of power source] over the other. China is very keen on energy diversity and sufficiency," Wu said at the forum when asked if China was prioritizing solar and wind power over nuclear power.
Wu said several issues hinder the nuclear sector's expansion in other Asian countries, such as the lack of public support in Japan, political posturing in South Korea, and the cost and technological obstacles faced by India.
Wu said that the 145 GW target was realistic for China, adding that the funding supports from state banks, institutional investors and equity markets would drive the sector's growth.
She said companies in China's nuclear power sector have better profitability than companies in other thermal power sectors, adding that the consistency of government policies also created motivation for investment in the nuclear sector.
Newbuild reactors will mostly rely on proprietary technologies, which also implies that China was subject to less obstacles, especially geopolitical risks, she added.
S&P Global Commodity Insights projects nuclear power to account for 10% of China's total power production in 2035, up from 5% in 2021. The share of nuclear power was also projected to be higher in the generation mix of coastal provinces at 15% in 2035, up from 11% in 2021.
Extensive offshore wind and solar power plants were not a realistic option in coastal provinces due to natural resource constraints, while nuclear power serves as a cost-effective alternative for decarbonization, Wu said.
China's renewable power resource is more abundant in northern and western regions, while the energy demand is higher in eastern and southern coastal regions due to faster economic growths and greater population density. Nowadays, renewables-based electricity is transmitted from North and West China to the coastal regions through ultra-high-voltage transmission lines.