Wednesday, July 7, 2010

Is Asia rising to dominate the global nuclear industry?

A series of headlines reveals strong competition between Japan and South Korea for market share

naoto-kanThe Wall Street Journal reports July 6 that Japan is aligning its nuclear industry to support exports of nuclear reactors and to respond to the competitive threat from South Korea. Six companies are working under the umbrella of a government backed effort through the Ministry of Economy, Trade and Industry.

The Wall Street Journal reports June 29 that the first evidence of government support appeared when Japan and India began negotiations to ink a civilian nuclear energy pact. The talks reportedly kicked off between Indian Prime Minister Manmohan Singh and Japanese Prime Minister Naoto Kan (right) during the G 20 meeting held in Toronto in June.

India plans to add 20 GWe of nuclear generating capacity over the next two decades. So far Japan hasn’t had any of the early action with India. Four new reactors to be built by the Russians and two more by Areva. Neither Westinghouse nor GE Hitachi have signed deals to build new reactors for India. However, GE Hitachi has signed a deal with Indian heavy manufacturing firms to develop a factory to build reactor components for domestic use and export.

The WSJ reports that Japan’s Kan has an economic growth strategy that relies on more exports of heavy industry projects. Japan is feeling the heat of competition from South Korea which inked a $20 billion contract last December to build four reactors in the United Arab Emirates (UAE).

The firms involved in the Japanese initiative include three nuclear energy utilities with deep operation experience and three firms that manufacture reactors components and build power plants. They are Tokyo Electric Power, Chubu Electric Power, Kansai Electric Power, Toshiba, Hitachi, and Mitsubishi Heavy Industries.

There is stiff competition for Japan’s export drive from South Korea. Bloomberg wire service reported June 30 that Doosan Heavy Industries won a $3.9 billion order to supply nuclear reactors, turbines, and related components to Korea Electric Power, which won the UAE contract.

vietnam-map Japan is focusing its nuclear energy marketing efforts on Vietnam which recently announced plans to build 13 new reactors by 2030 and inked a deal with Russia for the first two units.

Japan has been training nuclear engineers from Vietnam to help that country with its energy strategy. World Nuclear News reported July 6 that Japan is providing technical assistance to Vietnam’s Agency for Radiation and Nuclear Safety.

Small reactors in the mix

According to a May 4 report in the Straits Times, Malaysia is looking into acquiring small reactors to meet its energy needs. Its short list of sources leads with South Korea.

Seoul's Ministry of Education, Science and Technology said June 14 that a consortium led by Korea Electric Power Corp. will inject $82 million into a project to complete design work and technical verification of the system integrated modular advanced reactors ( SMARTs).

The project is organized by the state-run Korea Atomic Energy Research Institute. SMART is a pressurized water reactor, designed to generate up to 100 MWe for thermal applications such as seawater desalination.

China to shift builds to local sources

China is planning to increase its nuclear energy generating capacity from the current level of 9 GWe to 70 GWe by 2020. This investment in energy infrastructure will boost nuclear energy as a carbon emission free source of electricity from 1% of the nation’s power to 5% of its energy supply.

Map of China’s civilian nuclear projects

(Image via World Nuclear News)

China is building four new reactors with technology from Toshiba’s Westinghouse. The WSJ reports that new deals are being negotiated to build six more reactors. UPI reports July 6 that the plants will be located in Hunan, Hubei, and Jiangxi inland provinces.

However, the WSJ reports June 28 that China’s extraordinary drive to build new reactors is being hampered by a lack of trained nuclear engineers. The newspaper said projects could falter as managers learn to deal with the complexities of building reactors and there is a risk of accidents during construction.

Despite these challenges, the WSJ reported that banker Credit Suisse projects that the Chinese nuclear market will increasingly be driven by national companies building new reactors using Westinghouse AP1000 technology.

Areva in talks for new reactors in China

Anne LauvergeonDow Jones wire service reports July 6 that French state-owned nuclear giant Areva, which is already building two new nuclear reactors in China, is reportedly negotiating new deals for more reactors. The wire service cited a statement by CEO Anne Lauvergeon right), who made a presentation about the future of the company at an energy conference in France. Areva, like Japan, is struggling to increase its global market share of the nuclear energy business.

Areva and Lauvergeon have been under fire by the government of French President Nicolas Sarkozy over the loss of the UAE contract to South Korea. An energy policy paper, which includes an assessment of the future of the company, is reportedly under wraps, but may be released in the next few weeks according to a July 6 report by the AFP wire service.

The French government is planning to offer a 15% stake in Areva to investors. Mitsubishi and the sovereign wealth fund of Qatar are said to be high on the list of potential buyers. The sale of the shares will raise capital to support Areva’s expansion in global nuclear markets.

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