LONDON — Britain said on Thursday that it would allow Chinese firms to buy stakes in British nuclear power plants and eventually acquire majority holdings.
The agreement, which comes with caveats, opens the way for China’s fast-growing nuclear industry to play a significant role in Britain’s plans to proceed with construction of its first new reactor in nearly two decades.
George Osborne, chancellor of the Exchequer, made the announcement on Thursday while visiting a nuclear power station in southern China.
The project fits into Britain’s overall plan to deliver at least 12 new nuclear reactors at five sites by 2030. It contradicts countries like Germany and Japan that have pulled back from nuclear power since the Fukushima nuclear disaster in Japan in 2011. Britain has nine aging nuclear plants.
Under an agreement signed by the two countries, British companies like Rolls-Royce and International Nuclear Services could also win a bigger role in China’s nuclear power expansion, according to an e-mail from the British Embassy in Beijing that summarized Mr. Osborne’s statement.
China is already moving ahead with its own ambitious plan to build dozens of domestic nuclear power stations in coming years. China has 17 reactors now.
After an earthquake and tsunami led to partial meltdowns of three nuclear reactors in Fukushima, China imposed a moratorium on construction for many months. The pace of construction has not fully recovered, and China has since reduced its target for nuclear power capacity in 2015 to 40 gigawatts, from 50.
China’s interest in the British nuclear industry signals a break from a mostly domestic focus. While China has engaged in extensive cooperation with Pakistan in nuclear power, its industry has mostly concentrated on an enormous building program at home.
Mr. Osborne’s announcement incited a debate over which type of strategic assets European countries should open to investment from China.
“Cooperation on civil nuclear energy with China has been going on for a long time, and there are many French companies working with the Chinese on these issues, so it’s not something I find difficult to accept,” said Michel Barnier, the European commissioner responsible for the internal markets, speaking in London.
Britain’s energy market is already dominated by European giants, including E.D.F., the French state-controlled power company that is supposed to oversee construction and eventually operate the proposed Hinkley Point project in southwest England, and the German utility E.On. Opening its nuclear power industry to Chinese investment raises questions over Beijing’s influence in a highly sensitive energy sector.
The British government said that any Chinese investments had to meet strict standards for safety and security. Chinese investors will most likely have a minority stake in the Hinkley Point project, the government indicated Thursday, adding that “Over time, stakes in subsequent new power stations could be majority stakes.”
Antony Froggatt, a senior research fellow at Chatham House, a research institute in London, said there were few concerns with a Chinese role because of the partnership with the French in China. “If there were a falling-out politically, I think they would be more likely to withdraw funding than to switch off the lights,” he said.
While Germany wants to shut all of its nuclear plants by 2022 and shift almost entirely to wind and solar power by 2050, Britain is betting big on nuclear power. Though it is also pushing into production of shale oil and gas, Britain aims to cut greenhouse gas emissions in half by the mid-2020s in large part by renewing the older nuclear power plants.
But Britain’s ability to succeed with China’s help is anything but assured. Details of the planned Hinkley Point project in Somerset, including energy price guarantees offered by the British government that could result in higher power bills for consumers, are expected to be announced early next week. Britain says that there are no direct state subsidies for the project, which is now estimated to cost about $22 billion. Europe’s regulators who police state subsidies could dispute that figure.
If and when the new plant, Hinkley Point C, comes fully online, it will supply about 7 percent of Britain’s electricity. That would be enough power for five million homes, with the added benefit of no carbon emissions.
But the negotiations over the Hinkley Point plant have been long and difficult. Originally, E.D.F., which already operates 15 nuclear plants in Britain, had intended to be in partnership with Centrica, the owner of British Gas. But Centrica withdrew from discussions, saying the economic case for a partnership was not strong enough.
That setback underscores how building a new nuclear plant in the West is expensive and fraught with risk. Two French-designed plants under construction at Flamanville, France, and Olkiluoto, Finland, have been plagued by technical problems and huge cost overruns. Last year, two big German utilities, R.W.E. and E.On, decided not to proceed with construction of a plant that had been planned for Wales, largely because of the costs and the uncertainty of getting a return on their investment. E.D.F.’s stock price, along with those of many European utilities, has been under pressure of late.
Kirsty Alexander, head of communications for the Nuclear Industry Association, a trade association for Britain’s nuclear industry, said E.D.F. was bringing on partners because “it’s the huge upfront capital investment. It’s billions and billions of pounds. With nuclear you don’t see any return on your investment for 15 years.”
A possible investor is China General Nuclear Power, which is the majority stakeholder in the Taishan nuclear plant in Guangdong Province in southern China, where Mr. Osborne made his announcement on Thursday.
China passed the United States in overall generating capacity in 2011 and now has a total of 1,145 gigawatts, compared with a little more than 1,000 gigawatts in the United States. Nuclear power represents 1.1 percent of China’s electricity generating capacity, compared with nearly 10 percent in the United States. In terms of electricity actually generated, as opposed to capacity, nuclear is about 2 percent of the total in China and 19 percent in the United States.
Source: http://www.nytimes.com/2013/10/18/business/international/britain-to-let-chinese-buy-into-nuclear-power-plants.html?n=Top/Reference/Times%20Topics/People/B/Bradsher,%20Keith?ref=keithbradsher&pagewanted=print