The nuclear deal concluded between China and Russia earlier this month was another blow to America's declining global influence in the field of commercial nuclear energy, according to an article published on June 27 by Journal of Energy Security.
As the article writer, Junior Fellow at the American Foreign Policy Council (AFPC), James Grant, notes, the agreement envisaging construction costs in the amount of $15 billion (100 billion yuan) will become the largest bilateral deal in the field of nuclear energy. The cost of the initial set of contracts is estimated at between $3 and $5 billion.
According to the agreement, four VVER-1200 third-generation reactors designed by the Russian state corporation Rosatom will be built in China, along with the supply of elements to a generator for China's lunar program and the joint development of the fast-neutron reactor CFR600.
Thanks to cooperation with the U.S. Westinghouse, Russian Rosatom, and French Areva, China has now the possibility to design and build its own third-generation reactor — Hualong-1 — a cheap but effective alternative to Western competitors. However, despite its own potential, the Chinese National Nuclear Corporation (CNNC) is still purchasing power units of Russian design, such as VVER, James Grant writes.
As the analyst notes, Rosatom, which builds more reactors of the latest generation around the world than all of its competitors combined, will gladly benefit from the most profitable market for nuclear energy suppliers. The attractiveness of Russian products is partially provided by the all-inclusive packages offered for new NPPs. This includes funding the reactor construction, training staff, operation of facilities and even the treatment of spent nuclear fuel.
Developing countries such as China and India consider nuclear power as a way to meet the growing demand for electricity and at the same time improve the quality of the environment. Under these conditions, the potential of civilian nuclear power will only grow throughout the world. At the same time, James Grant believes that the US civilian nuclear power sector is not ready to reap the benefits of this “global renaissance”. Apart from 2013, when Westinghouse started the construction of four AP1000 reactors along the borders of South Carolina and Georgia, the last nuclear reactor project in the United States dates back to 1977.
There are many reasons for this, including strict security requirements, lack of political support, increased production costs, liberalization of the domestic electricity market, and competition from other sources of energy — primarily wind and natural gas. But perhaps the most serious obstacle to improving the competitiveness of the US nuclear power industry is the requirement that the production of electricity should be privately funded.
So, American nuclear companies have found themselves at a disadvantage in comparison with state corporations in Russia and China. Since such organizations as Rosatom and CNNC serve the purposes of their governments' energy strategies, they enjoy financial and political support regardless of market conditions, Grant points out.
Rosatom and CNNC have a lot of nuclear projects around the world. Russia has agreements with India, Bangladesh, Egypt, Jordan, Finland, Belarus, Hungary, and Turkey. For its part, China is active in Algeria, Ghana, Pakistan, Saudi Arabia and the United Kingdom. All this is a lost opportunity for Westinghouse and other Western nuclear corporations, the American analyst concluded.