Two key stakeholders, different paths
The European nuclear market is declining, or at best stagnating, whereas the Asian market is on the rise. France and China are two major stakeholders in the civil nuclear industry market and the two countries have been cooperating in the field for the past 30 years. After a period of disinterest, the nuclear industry is regaining momentum, particularly in the emerging Asian markets. In the 2016 ITA Civil Nuclear top Markets report, 4 Asian countries are in the top 5 for the overall ranking for the U.S civil nuclear exports, in order China, India, Vietnam and the United Arab Emirates. Global warming and the growing need for domestic and low-cost energy to support economic growth are two major challenges that nations around the world have to face in the 21st century.
The nuclear industry is seen by a number of countries as an efficient and potentially clean alternative to fossil energy. China is investing massively in new nuclear power plants and is currently building 27 nuclear reactors on its territory. Currently ranked 3rd, China should surpass France and the U.S by 2025 in terms of nuclear energy production. French companies such as Areva and EDF are trying to profit from the rapid growth of the Chinese nuclear industry. The two companies are participating in the construction of two EPR (European Pressurized Reactor) in Taishan.
Although the French nuclear market is not completely dead with the construction of the EPR in Flamanville, it is not dynamic enough for the numerous French nuclear industry companies to prosper. The industry peaked in France in the 1970s and 1980s and made the nuclear energy the source of nearly 80% of the electricity, the highest proportion in the world. This rate is likely to decrease rapidly, with the recent political promises to decommission a number of aging power plants. The French nuclear industry had to start conquering the global market to prosper, with China as a cruicial partner.
A worldwide cooperation
Nuclear power plant under construction in Taishan, with a large participation of Areva and EDF
In November 2015, Areva and CNNC (China National Nuclear Corporation) signed key contracts concerning uranium extraction, nuclear waste management and transport. French President Francois Hollande has also stated that France would welcomed foreign capital as part of the Areva restructuring. This would not affect France’s sovereignty, Hollande reassured, as the French State would still own 87% of Areva’s capital. However this shows that Areva is in relative difficulty with an important debt, and is ready to accept foreign investment in an industry that traditionally was a state monopoly.
The Hinkley Point project, where two EPR are to be built by EDF, Areva and CNNC
The United Kingdom is probably the only exception to the European market’s stagnation. EDF, AREVA and CNNC are currently finalizing the two Hinkley Point EPR. The project will cost £18bn (S$30bn) with a 33% participation from the Chinese stakeholder, raising the British medias’ concerns about the participation. However, the newly appointed Prime Minister Theresa May has approved the project, which will make the proportion of nuclear produced electricity in the UK go up to 7% if finalized.
Is this cooperation profitable for both parties?
Both France and China are hoping to continue and push forward the nuclear cooperation. For now, the two countries seem to profit equally from the arrangement. France has 60 years of nuclear energy experience and willing to export its technology and expertise, and China is eager to invest in the industry to support its growth. But the situation is most likely to change for the French, and the Eldorado they once found in China may well become not profitable. Once the Chinese nuclear industry has reached its full maturity, will there still be a need for the French companies’ expertise?A major shift is happening in the industry from West to East. The companies will have to diversify their activities in Asia notably in new emerging and growing markets such as Vietnam, India, South Korea that are very promising.
Do you think the French and other traditional nuclear powers will survive the industry’s shift from West to East?
Every year, these major issues are discussed by experts and nuclear industry stakeholders from all around the world at the Asia Nuclear Business Platform. The 5th edition will take place in Shanghai from the 16th to 18th of May 2017. For more information on how you can participate, contact [email protected]