Financial Services Association, January 3 (Reporter Liang Xiangcai) The commercialization of fourth-generation nuclear power technology and the “boom” in uranium prices brought the nuclear power industry back into the spotlight. By the end of last year, the international uranium price (U3O8) had risen to 91.6 US dollars/lb, a new high in nearly 17 years, and over 90% of downstream uranium applications were concentrated in the field of nuclear power fuel.

Nuclear power occupies an important place in the global energy supply due to its advantages of high efficiency, low carbon, and stability. Currently, the field of operation and maintenance of nuclear power plants in China is almost equally divided by China General Nuclear Power (003816.SZ) and China Nuclear Power (601985.SH).

CIFA reporters learned in multiple interviews that the nuclear power industry is gradually emerging from the “haze” of the Fukushima nuclear accident in Japan more than ten years ago. “Global and domestic nuclear power development is in a stage of rapid growth, and the future nuclear power market has broad prospects for development.” It is estimated that by 2035, China's nuclear power will account for about 10% of total power generation, double that of 2022.

The “double-headed” pattern of nuclear power is difficult to change in the short term

The “two heads” in the field of operation and maintenance of nuclear power plants in China are China General Nuclear Power and China Nuclear Power, respectively.

According to CGN's announcement, as of the end of 2022, the company had 26 and 7 nuclear power units in operation and construction respectively, with an installed capacity of 29.38 million kilowatts and 8.38 million kilowatts, accounting for 47.30% of the country's total installed capacity of nuclear power plants in operation and under construction; the total feed-in capacity of nuclear power plants managed by the company was 198,375 billion kilowatt-hours, accounting for 50.63% of the feed-in power capacity of commercial nuclear power units in the country.

China's nuclear power is no less impressive. By the end of 2022, the company had 25 and 8 nuclear power units in operation and construction, respectively, with an installed capacity of 23.75 million kilowatts and 8.888 million kilowatts, accounting for 40.87% of the country's total installed capacity of nuclear power plants in operation and under construction; the total feed-in capacity of nuclear power plants managed by the company was 173.216 billion kilowatt-hours, accounting for 44.21% of the feed-in electricity capacity of commercial nuclear power units in the country.

Benefiting from the high level of prosperity in the nuclear power industry, the performance of China Nuclear Power and China General Nuclear Power has shown a steady growth trend in recent years. In 2020-2022, CGN's net profit to mother was 9.562 billion yuan, 9.764 billion yuan, and 99.65 billion yuan respectively, with year-on-year increases of 1.02%, 2.11%, and 2.06% respectively; China Nuclear Power's net profit to mother during the same period was 5.995 billion yuan, 8.217 billion yuan, and 9.01 billion yuan respectively, with year-on-year increases of 26.02%, 37.05%, and 9.66%, respectively.

According to China Nuclear Power's January 2 announcement, the company's units 1 and 2 of the Jinqimen Nuclear Power Project in Zhejiang have passed the review by relevant departments. According to reports, these two approved units use “Hualong 1” nuclear power technology, and the rated power of a single unit is 1,25MW.

“Currently, the project is in the early stages of preparation. It is estimated that it will take about one to one and a half years to officially start construction. The average construction period for the 'Hualong 1' nuclear power plant is about 57-60 months. Currently, the company still has a large number of nuclear power reserves, and in the end, it will be subject to approval by higher authorities.” The reporter learned from China Nuclear Power as an investor.

According to reports, the nuclear power sector has high requirements for technology, safety, operation and maintenance experience, etc., and the construction of the project requires approval from the State Council. Overall, the entry threshold is very high.

Currently, in addition to CGN and China Nuclear Power, there are also two domestic “latecomers” with nuclear power operating licenses, namely China Power Investment Group and China Huaneng Group, but there is still a certain gap between the latter two in terms of market share and accumulation of operation and maintenance experience compared to the “double”.

Nuclear power may usher in a “second spring” of development

Industry insiders are generally optimistic about the future development prospects of nuclear power.

“Global and domestic nuclear power development is in a stage of rapid growth, and the future nuclear power market has broad prospects for development.” Zhu Keli, executive director of the China Information Association and founding director of the National Research Institute of New Economics, told the Financial Federation that after a period of stagnation, global nuclear power is currently in a phase of recovery and growth. Driven by both environmental pressure and energy demand, nuclear power is once again receiving attention from various countries. Driven by the continuous maturity of technology and gradual reduction in costs, next-generation nuclear energy technologies, such as small modular reactors (SMR) and molten salt reactors, are injecting new vitality into the development of nuclear power.

Workers involved in nuclear power in China said that at present, the country is developing nuclear power under the concept of “active, safe and orderly”. According to approximate estimates within the industry, there is still room for about 200 offshore nuclear power plants. Compared with European and American countries, there is more room for future domestic nuclear power development, and in the context of dual carbon, nuclear power is an important low-carbon energy source, and it also has an advantage in stability compared to “wind and photovoltaics.”

CGN told a reporter calling as an investor that according to the company's understanding of industry policy, it is estimated that in the next 8-10 years, the country may receive approval for about 6-8 nuclear power units each year. By 2035, the share of domestic nuclear power generation is expected to rise from about 5% to about 10%.

Du Fei, a non-ferrous metals researcher at Huaxin Securities, told reporters that global nuclear power development is returning to a rapid development channel after ten years of sluggishness since the Fukushima nuclear accident. Domestic nuclear power planning and construction has maintained a high growth rate. Mainland China is operating 55 nuclear power units, and 25 units are planned for 2023-2028. Overseas, although the denuclearization camp led by Germany in the European region still excludes nuclear power, the nuclear power camp, which is dominated by France and Eastern European countries, is stepping up its planning efforts. In addition, Japan in Asia has also restarted the operation of nuclear power units. As of the third quarter of 2023, 12 units have been restarted.

However, there are also industry insiders who are more cautious. Yuan Shuai, Deputy Secretary General of the Zhongguancun Internet of Things Industry Alliance and Executive Director of the Project to Promote the High-Quality Development of Specialized New Enterprises, said that overall, there is still uncertainty about the future development prospects of the nuclear power market. Although nuclear energy has great potential as a clean and stable form of energy, many technical and environmental challenges need to be overcome in order to achieve sustainable development in the nuclear power market. For example, the safety of nuclear energy and waste disposal issues have always been the focus of public attention. Furthermore, with the development of renewable energy and the reduction in costs, the market competitiveness of nuclear power may also be affected to a certain extent.

The “China Nuclear Energy Development Report (2023)” blue book mentions that by 2030, China is expected to have the highest installed capacity of nuclear power in operation in the world. It is estimated that by 2035, China's nuclear power generation will account for about 10% of total power generation, double that of 2022.

It is worth mentioning that on December 6, 2023, the world's first fourth-generation nuclear power plant, the Huaneng Shidaowan High Temperature Air Cooled Reactor Nuclear Power Plant, was officially put into commercial operation. This is a landmark achievement of China's major national science and technology project with completely independent intellectual property rights.

A Huatai Securities research report mentioned that it is expected that fourth-generation nuclear power technology and small reactors may be the second growth curve for the development of the nuclear power industry. On the one hand, it can be an important supplement to China's margin guarantee after 2033, and on the other hand, it will help nuclear power gradually open up the ceiling of its coastal installations and inland applications.