How Did China Get Involved in the UK Nuclear Energy Sector?

George Osborne, the erstwhile Chancellor of Exchequer, visited China in 2015 to cement the economic partnership between the two nations.

He had commented that “China and Britain stand on the brink of a golden decade of cooperation.”

Looking back after last fortnight’s developments banning Huawei from Britain, it seems to have been wishful thinking that ended half a decade too early.

To add to the already strained relationship, Britain has offered 350,000 citizens of Hong Kong asylum in Britain if they wished to escape the draconian new security laws enacted at the behest of Beijing.

Huawei’s investment in British telecom has suddenly become the talk of the town. But it is far from being the most sensitive.

China General Nuclear Power owned by the Chinese government is a one-third stakeholder in Hinkley Point C nuclear power station.

The HPC is under construction at Somerset and is the first reactor to be built on British soil since 1995.

For the investment CGN made, it was promised a 20% stake in the planned Sizewell plant in Suffolk as well as a wholly-owned nuclear plant at Bradwell in Essex, which would be the first Chinese reactor to be built outside China.

The Case for Fission

Since the Sizewell B plant was commissioned 25 years ago, the UK, like the US, has largely ignored nuclear energy.

Though the energy is clean and barring the initial investment quite cheap, it had fallen out of favor. The accident at Fukushima only made it that much harder to get public consensus for building a nuclear reactor.

Why the renewed interest? At the moment, nuclear power supplies about a fifth of the energy needed in the UK. But most of these reactors are creaky and need to be scrapped by 2030.

The two new reactors being built at Hinkley Point C in southwest England have the potential to provide 7% of the nation’s needs and power about five million homes.

Due to the Paris Climate Accord UK needs to get at least 40% of its power from non-fossil fuel sources by 2050. The aim to be carbon neutral in three more decades is unlikely to be met unless there are new reactors since wind farms are restricted to the north of the isles. The largest among these, South Kyle Windfarm, slated to be completed soon would provide power to only 150,000 homes. That is at least 40 times smaller than Hinkley Point.

How Did China’s Involvement Happen?

The Hinkley Point C project is enormous. It has a staggering price tag of $30 billion and is being built by Electricite de France SA in collaboration with China General Nuclear Power.

At 3200 MW, it is the size of three giant thermal power plants and uses a new technology known as the European Pressurized Reactor developed by EDF, Areva and Siemens.

While the US and UK have been in deep slumber for two decades, reactors are being built at a rapid clip in China. It has 46 nuclear reactors in operation and 11 more under construction. In the past five years, power generation from fissile material has quadrupled to 43 GW.

This massive rollout was mainly with technology from EDF-Areva and Westinghouse-Toshiba.

They have formed mammoth consortiums with China General Nuclear Power, China National Nuclear Corporation, China State Nuclear Power Technology Corporation. The West provided the technology, and the Chinese public sector firms built the sites with unparalleled speed.

It has been a symbiotic existence with revenue for EDF, and Westinghouse and the Chinese gaining the expertise and understanding best practices of nuclear reactor design.

CGN is incorporating Areva EPR reactors in its brand new Taishan plant, and CSNTPC is working with Westinghouse AP1000 in Haiyang and Sanmen.

What does China want from all of this? As the world moves to a fossil fuel-free era, the nation wants to become a significant global player in setting up nuclear power plants. It sells cheap cell phones all over Asia and Africa with the expertise attained while manufacturing devices for the US market. The same principle is at work here.

Nothing that China does is knee jerk. There is always a 20-year gameplan.

Investment in HPC is the first stage and thus the minority stake.

The second stage – to develop its own third-generation reactor and use it at Bradwell is a decade down the line.

Chinese Stake in UK Nuclear Power is Not Without Parallel

HPC is not an isolated incident. Far from it.

China National Offshore Oil Corporation is the biggest operator in the North Sea, accounting for a quarter of the country’s oil production.

Another Chinese public sector company Huaneng Group is building the largest battery project for wind farms at Wiltshire.

China Investment Corporation holds a 10% stake in Heathrow expansion.

Chinese steelmaker Jingye purchased British Steel last year.

The list is endless.

And it’s not only China that is heavily involved in Britain’s infrastructure. Most of the UK’s rail franchises are owned by European companies.

For decades the UK has neglected investment in infrastructure but preferred to outsource it to foreign companies. Due to its growing economic strength, China happened to be at the right time in the right place to exploit the situation.

What’s Next For HPC?

China would definitely not yield without a tough fight. After all, post-Brexit and facing the ire of the EU, Britain would depend heavily on both the US and China as it charts its own course.

Through its assets in the UK, including HPC, China has all the leverage it needs to bend the UK to its will.

China’s ambassador to the UK, Liu Xiaoming, didn’t back down from saying that the UK has become a vassal state of the US in banning Huawei.

In the meantime, British PM Boris Johnson’s spokesman has strenuously denied that there is any threat to Chinese investment in British nuclear power due to retaliation for Huawei pullout.

Everyone needs to take a deep breath and step back. As luck would have it, there can be no imminent decision about the Bradwell plant since the project is yet to be sanctioned. The UK’s nuclear regulator is going to weigh in on the issue in another 18 months.

By that time, it is expected that robust diplomacy would have thrashed out a compromise that keeps Chinese investment in the UK nuclear power industry alive and well.

Sources –

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