SINGAPORE/EDINBURGH/HOUSTON, 28th April 2014 – Wood Mackenzie forecasts that China will not meet its environmentally-driven, government target of 200 Gigawatts (GW) nuclear power capacity by 2030 due to a number of constraints. The report, titled 'Are China's nuclear power plans achievable?', concludes that while there will be significant progress, with nuclear capacity increasing from 14.6 GW in 2013 to 175 GW by 2030, the missed targets will translate into opportunities for coal producers to capture additional demand growth.
Mr Gavin Thompson, Head of Asia Pacific Gas & Power research for Wood Mackenzie says, "China's environmental measures will drive notable nuclear capacity growth. Additionally, uranium supply will be available for China. However, remaining challenges will result in nuclear falling short of government targets. The government targets 200 GW of nuclear capacity, which would make up 11% of the power generation mix by 2030. In reality, we forecast nuclear capacity to reach 175 GW by then, making up just ten percent of the power generation mix: equivalent to a 2.3% annual growth, from 14.6 GW of nuclear capacity in 2013.”
Wood Mackenzie says that by 2030, China‘s nuclear capacity will account for 30% of the world's total nuclear fleet. Mr Thompson adds, "Putting things into context, in 2013 China made up a mere 4.5% of the global nuclear fleet. Therefore the growth we expect in this timeframe is phenomenal, even if targets are not met."
"What is noteworthy about our forecast is that despite environmental measures pushing for a reduction in coal-fired power generation in China, a shortfall in nuclear capacity will create additional opportunities for coal suppliers, on top of coal remaining the dominant source of base-load electricity," Thompson explains.
Wood Mackenzie's nuclear generation forecast reveals a 200 terawatt-hours (TWh) gap of base-load electricity supply. Coal is expected to meet 125 TWh of the gap while natural gas and renewables accounts for the remainder. Though natural gas production and imports will significantly increase, it will be insufficient to prevent coal from accounting for 64% of the power generation mix by 2030. The report highlights that although coal’s share will decline from 75% in 2013, due to the rapid growth in natural gas and renewables capacity, coal will still see net volume growth. Additionally, the one percent upside for coal from nuclear not meeting targets will translate to an additional coal demand of 63 million tonnes per year (mmtpa) by 2025 and 55 mmtpa by 2030.
“Our expectations for a lower level of installed nuclear capacity compared to the government's target are based on a number of factors: operational and siting challenges; constraints on the pace of local nuclear technology development; lack of skilled and trained personnel; lack of supporting infrastructure for uranium fuel fabrication and disposal; and a lack of full support by the public in building inland plants. As such, it’s likely that some of the planned and proposed capacity build will be delayed or cancelled,” Thompson elaborates.
Mr Thompson concludes, "We took into account these challenges that hold back the development of nuclear but still see China making incredible progress and coming close to government targets of 200 GW by 2030. Our nuclear outlook for China reinforces Wood Mackenzie’s view that coal will continue to play a dominant role in power generation in the foreseeable future, even with the successful implementation of new environmental measures. While nuclear will moderate the growth in coal-fired generation, China's coal story is far from over.”