The global nuclear power industry is emerging from the shadow of the Fukushima nuclear leak.

According to multiple interviews conducted by the Financial Associated Press (FATP), China's nuclear power is catching up under the high prosperity of the global nuclear power restart. Recently, five nuclear power projects with a total of 11 units were approved at one time, including a first-time approved fourth-generation commercial unit, with an expected total investment of approximately 200 billion yuan. It is expected that this accelerated construction pace can be maintained.

In addition to the "two leaders" in the operation and maintenance sector of nuclear power plants, CGN Power Co., Ltd. (003816.SZ) and China National Nuclear Power Corporation (601985.SH), industry chain enterprises such as Rongfa Nuclear Equipment (002366.SZ), Harbin Electric Corporation Jiamusi Electric Machine (000922.SZ), and Sufa Technology Industry (000777.SZ) are also getting a share from the booming industry.

Acceleration of domestic nuclear power

On August 19th, the State Council of China approved five nuclear power projects, including the Jiangsu Xupu Phase I project. Among them, CGN Power was approved for three projects with 6 units, China National Nuclear Power Corporation was approved for one project with 3 units, and State Power Investment Corporation was approved for one project with 2 units.

Jia Pang, Partner and Managing Director of Sullivan in Greater China, told the Financial Associated Press (FATP) that since the restart of nuclear power in 2019, the number of approved nuclear power units in China has been steadily increasing each year. The scale of the 11 units in the 5 approved nuclear power projects this time is in line with market expectations.

Zhang Yu, who focuses on research in the nuclear power industry, told the Financial Associated Press (FATP) that the number of approved nuclear power projects in this batch has exceeded expectations. This is the first time that 11 units have been approved at one time, and it is not ruled out that there may be new projects approved later this year. The nuclear power industry has sufficient cash flow, and the largest capital expenditure is the construction of nuclear power plants, which basically becomes a "money-making machine" after completion.

According to the data from the China Nuclear Energy Association, the number of approved nuclear power units in China from 2019 to 2023 is 6 units, 4 units, 5 units, 10 units, and 10 units respectively, showing an orderly expansion trend.

Of the 5 nuclear power projects, it is worth noting that the first phase of the Xuwei nuclear heating plant proposed by China National Nuclear Corporation, which includes the construction of a HTR-PM600S high-temperature gas-cooled reactor unit and supporting facilities, is the world's first approved fourth-generation gas-cooled reactor unit.

Chinese nuclear power personnel have informed reporters in their capacity as investors that the above-mentioned fourth-generation gas-cooled reactor is the first approved commercial nuclear power unit in the industry, which is currently designed to primarily provide industrial steam, with a portion of the electricity directly connected to the grid.

Zhang Yu believes that the approved fourth-generation technology units in the Hualong One project have a normal capacity of 1200 megawatts per unit. The approved installed capacity for this project is not large, only 660 megawatts, which can be considered as a commercial experimental attempt and still has a certain distance to full commercialization.

It is reported that the current proportion of nuclear power in China's power structure has reached about 5%. Previously, the industry generally estimated that the annual increase in nuclear power installed capacity is about 6-8 units. According to the China Nuclear Energy Association, it is predicted that by 2035, the proportion of nuclear power in China will increase to about 10%, reaching the current global average level.

On August 11th, the Central Committee and the State Council of the Communist Party of China issued the "Opinions on Accelerating the Comprehensive Green Transformation of Economic and Social Development", which mentioned the need to accelerate the construction of clean energy bases such as coastal nuclear power, actively and safely develop nuclear power, and maintain a reasonable layout and stable construction pace.

The industry chain is expected to benefit in the long term.

The global nuclear power industry is gradually emerging from the shadow of the Fukushima nuclear leakage incident in 2011, and under the high prosperity of the global nuclear power restart, companies in the nuclear power industry chain are expected to benefit in the long term.

Since the beginning of this year, the "two leading players" in the domestic nuclear power plant operation and maintenance field, CGN Power Co., Ltd. and China National Nuclear Power, have been favored by capital. At the end of July, the former's stock price reached a historical high, and the latter's stock price also surpassed 12 yuan at one point, approaching its historical high. Currently, both stock prices have dipped but are still running at high levels.

In terms of performance, the net profits of CGN Power Co., Ltd. from 2021 to 2023 are 9.764 billion yuan, 9.964 billion yuan, and 10.725 billion yuan, with year-on-year growth rates of 2.11%, 2.04%, and 7.64% respectively. The net profits of China National Nuclear Power during the same period are 8.217 billion yuan, 9.01 billion yuan, and 10.624 billion yuan, with year-on-year growth rates of 37.05%, 9.66%, and 17.91% respectively.

According to the staff of China National Nuclear Power, the biggest cost in the operation and maintenance of nuclear power plants is depreciation. Taking the units with third-generation technology as an example, depreciation generally accounts for about 40% of the operating costs of nuclear power operators. The average depreciation period is 35 years, and the operating cycle after construction can reach 60 years. After evaluation by the relevant departments, another 20-year operating period extension can be granted. If there are no issues, the operation can be extended indefinitely.

Zhang Yu stated that China is currently at a leading global level in terms of nuclear power technology and the manufacturing of key materials. For example, the main force in domestic nuclear power, the "Hualong One" unit, is independently developed by China with a self-sufficiency rate of about 95%, and the remaining equipment to be imported is not in particularly critical areas.

According to industry insiders, for units with third-generation nuclear power technology, the investment for a project with two units is about 40 billion yuan. The total investment for the five approved nuclear power projects in this round is expected to be around 200 billion yuan.

The staff of Rongfa Nuclear Equipment and Harbin Electric Corporation Jiamusi Electric Machine stated, as investors, that the company will also benefit from the high prosperity of the industry. However, the entire nuclear power plant construction cycle is relatively long, around 5 years, and the company generally needs to be involved in the early stage, making it difficult to determine the specific confirmation time for profits.

Sufa Technology Industry stated at the performance briefing held in May that the company currently has ample orders on hand, and all nuclear power units under construction in China have supply contracts. The total value of nuclear power orders on hand exceeds 2 billion yuan.

Restart of global nuclear power.

Jia Pang told the reporter that currently, global nuclear power is in a phase of restart and development, with major nuclear power countries restarting or expanding nuclear power investment; after years of experience from introduction and digestion to independent innovation development, domestic nuclear power technology is already at the world's leading level.

Regarding the reasons for the global restart of nuclear power in recent years, Zhang Yu told the reporter that continuous geopolitical conflicts and events such as the surge in natural gas prices in Europe under the impact of the Russo-Ukrainian war have brought the issue of energy independence to the attention of countries again, and nuclear power is the preferred choice for low-carbon stable power.

Data from the International Atomic Energy Agency (IAEA) shows that the carbon emissions per kilowatt-hour of electricity produced throughout the lifecycle of nuclear power is 5.7 grams. Under the same caliber, photovoltaic power generation has a carbon emission of 74.6 grams per kilowatt-hour, hydropower has 64.4 grams, and wind power has 13.3 grams.

China General Nuclear Power Corporation (CGN) employees told Caixin reporters in the capacity of investors that according to a rough estimate in the industry, there are approximately 70 to 80 sites reserved for nuclear power plants along the coast. As an important low-carbon energy source, nuclear power has more advantages in terms of stability and carbon control compared to 'wind-solar power', and has a larger potential for future growth.

According to the 'China Nuclear Energy Development Report 2024' blue book published in April 2024 by the China Nuclear Energy Association, as of the end of 2023, there are a total of 55 operating nuclear power units in China with a total installed capacity of 57.03 million kilowatts, ranking third globally after the United States and France. Up to now, China has 26 nuclear power units under construction with a total installed capacity of 30.3 million kilowatts, maintaining its status as the world's number one.

As for global nuclear power development, according to statistics from Sullivan, on December 2, 2023, 22 countries led by the United States, France, and the United Kingdom jointly launched the 'Triple Nuclear Energy' declaration at COP28, proposing the goal of achieving three times the current global installed capacity of nuclear energy by 2050, making nuclear energy a key part of the path to achieving net zero emissions. In March 2024, the Biden administration announced a $1.5 billion loan to restart the Palisades nuclear power plant in southwestern Michigan. In April 2024, Tokyo Electric Power Company in Japan announced that all 872 fuel rods for Reactor No. 7 at the Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture have been loaded, and it is expected to restart and begin generating power in October of this year.

It is worth mentioning that in the downstream applications of uranium, the vast majority is used in the field of nuclear power. Since last year, the international price of uranium (U3O8) has been rising rapidly, reaching over $100/pound at the beginning of this year, a new high in nearly 16 years. Currently, although the price of uranium has fallen somewhat, it is still around $80/pound, which is historically high.

Trends in uranium price (U3O8) on the Chicago Mercantile Exchange since 2008. Data source: Investing.com

(In the text, Zhang Yu is a pseudonym)