Foreign energy giants bid for China's nuclear contracts

China has yet to decide an exact date for issuing tenders of its four new nuclear powerenerators, but the winner is at this stage very likely to be either US-based Westinghouse Electric Co Ltd, or French company Areva, or Russian firm AtomStroyExport (ASE).

"The tender documents and proposals have already been approved by the State Council, and now we have presented them to the National Development and Reform Commission for final approval," Yu Jianfeng, director of the Nuclear Power Department of China National Nuclear Corp (CNNC), which is working to offer the tender.

There's no specific timetable for the bidding yet, Yu added. This is the country's first bidding for nuclear power projects which is open to foreign companies.China is expected to invite foreign companies only to bid for four 1,000-megawatt pressurized-water nuclear power facilities by the end of this year.

The winner will be in charge of the design and construction of the four generators, two located in Sanmen, East China's Zhejiang Province and the other two in Yangjiang, South China's Guangdong Province.Several foreign companies including Westinghouse, Areva, ASE, Japan's
Mitsubishi, France's Alstom, and the Atomic Energy of Canada Ltd, havebeen scrambling for the multi-billion dollar contracts.

Yu said: "The winner should be either Westinghouse, Areva or ASE."
Yu said China wants to adopt the latest, third-generation reactor technology, which it has been unable to develop itself.

France-based Areva, which has been promoting its third-generation reactor technology built by its Famatone subsidiary, seems confident."We are very well prepared," Reme de Preneuf, chief representative of Areva for nuclear business in China, told China Business Weekly last week.
"We do not know the precise requirements, but we are in a fairly good position," he said.

Areva has won the contract to build a third-generation reactor, called the European Pressurized Reactor, in Finland, the first and so far the only one of its kind in the world, said de Preneuf.To date, Areva has built more than 70 reactors worldwide, and continuous improvements in its nuclear power technology have made it possible for Areva to provide evolutionary designs, which its competitors do not have, he said.

Moreover, the electricity generated by Areva-designed reactors is quite cost-competitive, "and that's why the Finnish company has chosen us," he said.According to Yu, the bidders should offer cost-competitive designs,regarding both construction and daily operation.

The electricity price of nuclear power should be close to that of thermal power - only slightly higher, Yu said.He refused to comment on the expected total investment.The official budget ofeach generator is usually between US$1.5-US$2.0 billion.Compared with its US counterparts, which have no nuclear deals in China, Areva has richer experience, said de Preneuf."We have a long-term co-operation with China and know about local needs fairly well," he said.

Areva has transferred its technologies to between 14 and 20 Chinese nuclear power facilities producers so far. Its technology has been adopted in reactors in Ling'ao and Dayawan, both in South China's Guangdong Province, and as well as the Qinshan phase II units, in EastChina's Zhejiang Province.According to Yu, the bidders must not only be capable of designing and
constructing nuclear power generators with the new technology, but help promote the country's domestic nuclear power industry through co-operation.

The Chinese Government has been attaching great importance to self-reliance in the industry.
Apart from that, the French Government has been providing continuous support for Areva's nuclear technology export, noted de Preneuf.In contrast, US-based leading nuclear power company Westinghouse has no presence in China, as the US Government has been restricting exports of nuclear technology to China.

This was the case until earlier this year, when US Vice-President Dick Cheney made a pitch for Westinghouse during his three-day visit to China.If Westinghouse could get the deal, it would help narrow the huge US trade deficit with China - about US$113 billion last year, and create
thousands of jobs in the United States.

Earlier reports said Westinghouse was pinning its hopes on the 1,100 megawatt AP 1000 reactor, with an initial installment cost of US$1.5 billion per unit.Westinghouse was unavailable for comment.According to Yu, construction of the next-generation generator designed by Westinghouse takes 48 months, shorter than the average time-span of 60 months.

ASE was also unavailable for comment.It is believed that winning the first deal is vital to vendors, as China has indicated it will adopt a unified, standardized design across its nuclear industry and drop the existing combined technology of France, Canada, Japan and Russia.

Chinese officials estimate that by 2020 the country will need an additional installation capacity of 32,000 megawatts from the nuclearindustry, or about 32 new reactors.China currently has nine operating reactors, with a total nuclear power capacity of 7,010 megawatts by the end of July.That accounts for only 1.6 per cent of the country's total installation capacity of power plants.Even with the surge in reactor construction, nuclear power will contribute only 4 per cent of China's electricity output by 2020, far below the average among countries with nuclear power plants - 17 per

cent.