The global nuclear power industry is emerging from the shadow of the Fukushima nuclear leak in Japan.

According to multiple interviews from reporters of Finance association, China National Nuclear Power is catching up under the high prosperity of global nuclear power restart. Recently, 5 nuclear power projects were approved at once with a total of 11 units, including a commercial unit with fourth-generation technology approved for the first time, with an expected total investment of about 200 billion yuan; the pace of this accelerated construction is expected to be maintained.

In addition to the two leading companies in the operation and maintenance of nuclear power plants, China Guangdong Nuclear Power (003816.SZ) and China National Nuclear Power (601985.SH), Rongfa Nuclear Equipment (002366.SZ), Harbin Electric Corporation Jiamusi Electric Machine (000922.SZ), Sufa Technology Industry (000777.SZ), and other industry chain enterprises are also getting a share from the high-profit industry.

Accelerating the development of domestic nuclear power

On August 19, the State Council approved five nuclear power projects including the Xupu phase 1 project in Jiangsu. Among them, China Guangdong Nuclear Power's three projects and 6 units were approved, China National Nuclear's one project and 3 units were approved, and China National Energy Holdings' two units were approved.

Jia Pang, partner and general manager of Sullivan Greater China, told reporters of Finance association that since the restart of nuclear power in 2019, the number of approved nuclear power units in China has maintained a steady growth each year. The scale of 11 units for 5 approved nuclear power projects this time is in line with market expectations and this accelerated construction pace is expected to be maintained.

Zhang Yu, who focuses on the nuclear power industry research, told reporters of Finance association that the number of approved nuclear power projects this time has exceeded expectations in terms of quantity, this is the first time that 11 units have been approved at one time, and it is not ruled out that new projects may be approved within this year; the cash flow of the nuclear power industry is sufficient, and the biggest capital expenditure is the construction of nuclear power plants, which is basically a 'money-printing machine' after being built.

According to the data from China Nuclear Energy Association, from 2019 to 2023, the number of approved nuclear power units in China will be 6, 4, 5, 10, and 10 respectively each year, showing a trend of orderly expansion.

It is worth noting that among the 5 nuclear power projects approved this time, the HTR-PM600S high-temperature gas-cooled reactor unit and supporting facilities planned to be built in the Xupu Nuclear Energy Heating Plant Phase I project of China National Nuclear Power is the world's first approved fourth-generation gas-cooled reactor unit.

China National Nuclear Power staff told the reporters who consulted as investors that the above four-generation gas-cooled reactor unit is the first commercial nuclear power unit approved in the industry. At present, it is designed to mainly provide industrial steam, and the other part of the electricity directly enters the grid.

Zhang Yu believes that the fourth-generation technology unit approved this time is placed in the Hualong One project. Generally, the capacity of a single unit in the project is at the level of 1,200 megawatts, and the approved installed capacity this time is not large, it is only 660 megawatts. This is a commercial experimental attempt, with some distance from mature commercial use.

It is reported that the proportion of domestic nuclear power in the power structure has reached about 5%. Previously, the industry generally expected that the annual increase in nuclear power installed capacity would be about 6-8 units. According to the China Nuclear Energy Association's prediction, by 2035, the proportion of domestic nuclear power will increase to about 10%, reaching the current global average level.

On August 11th, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Accelerating the Comprehensive Green Transformation of Economic and Social Development", mentioning that it is necessary to accelerate the construction of clean energy bases such as coastal nuclear power, actively and securely develop nuclear power, and maintain a reasonable layout and steady construction pace.

The industry chain is expected to benefit in the long term.

The global nuclear power industry is gradually emerging from the shadow of the Fukushima nuclear leak incident in 2011. Under the high-prosperity of the global nuclear power restart, companies in the nuclear power industry chain are expected to benefit in the long term.

Since this year, the "double leaders" in the domestic nuclear power plant operation and maintenance field, CGN Power Co.,Ltd. and China National Nuclear Corporation, have been sought after by capital. At the end of July, the former's stock price reached a historical high, while the latter's stock price also broke through 12 yuan at one point and is now still running at a high level after a slight retracement. In terms of product structure, the operating income of 10-30 billion yuan products are 401/1288/60 million yuan respectively.

In terms of performance, CGN Power Co.,Ltd.'s net income for 2021-2023 were 9.764 billion yuan, 9.964 billion yuan, and 10.725 billion yuan, with year-on-year growth rates of 2.11%, 2.04%, and 7.64%, respectively; China National Nuclear Corporation's net income in the same period were 8.217 billion yuan, 9.01 billion yuan, and 10.624 billion yuan, with year-on-year growth rates of 37.05%, 9.66%, and 17.91%, respectively.

China National Nuclear Corporation staff stated that depreciation is the biggest cost in the operation and maintenance of nuclear power plants; for example, for third-generation technology units, depreciation generally accounts for about 40% of the operating costs of nuclear power plant operators. The average depreciation period is 35 years, and the operation period after completion can reach 60 years. After that, if it can pass the evaluation of relevant departments, it can be extended for another 20 years of operation. If there are no problems, it can be extended indefinitely.

Zhang Yu said that at present, China is at the forefront of the world in terms of nuclear power technology and key materials manufacturing; for example, the main nuclear power unit in China, the "Hualong One" unit, is independently developed by China, and the domestic self-sufficiency rate is about 95%, and the remaining imports are not in particularly critical areas of equipment.

According to Caixin's industry sources, taking third-generation nuclear power technology units as an example, the investment in a project with two units is about 40 billion yuan. The total investment of the five approved nuclear power projects is expected to be about 200 billion yuan.

Rongfa Nuclear Equipment and Harbin Electric Corporation Jiamusi Electric Machine staff both told Caixin reporters who consulted them as investors that the company will also benefit from the high prosperity of the industry. However, the entire construction period of a nuclear power plant is relatively long, at about 5 years; the company generally needs to participate in it in the early stage, and it is difficult to determine the specific confirmation time of profits.

Sufa Technology Industry stated at the performance briefing held in May that the company currently has sufficient orders on hand, and all nuclear power units under construction in China have supply contracts; its nuclear power on-hand orders exceed 2 billion.

Global nuclear power restarts.

Jia Pang told reporters that currently, global nuclear power is in a stage of restart and development, and major countries with nuclear power are restarting or expanding their nuclear power investments; after experiencing the experience of importing and digesting to independent innovation for many years, China's nuclear power technology has reached the world's leading level.

Regarding the reasons for the global nuclear power restart in recent years, Zhang Yu told reporters that with the constant geopolitical conflicts in the world, events such as the skyrocketing prices of natural gas in Europe under the influence of the Russia-Ukraine conflict have brought attention back to energy independence. Nuclear power is the first choice for low-carbon and stable power.

According to data from the International Atomic Energy Agency (IAEA), the carbon emissions for producing 1 kWh of electricity throughout the life cycle of nuclear power is 5.7 grams. In comparison, for the same amount of electricity produced, photovoltaic power generation's carbon emissions throughout its life cycle is 74.6 grams, hydropower is 64.4 grams, and wind power is 13.3 grams.

CGN Power Co.,Ltd. staff told Caixin reporters who consulted them as investors that the coastal nuclear power plant sites have reserved space for about 70 to 80 units; as an important low-carbon energy source, nuclear power has more advantages in stability and carbon control than "wind power and solar energy", and has a large future growth potential.

According to the 2024 China Nuclear Energy Development Report (Blue Book) released by the China Nuclear Energy Association, as of the end of 2023, there were 55 nuclear power units in operation in China, with a total installed capacity of 57.03 million kW, second only to the United States and France, ranking third in the world. As of now, there are 26 nuclear power units under construction in China, with a total installed capacity of 30.3 million kW, maintaining its position as the world leader.

On December 2, 2023, 22 countries led by the United States, France, and the United Kingdom jointly launched the "Triple Nuclear Energy" declaration at COP28, proposing to achieve the goal of tripling the global nuclear power installed capacity to its current level by 2050, making nuclear power a key link in achieving net-zero emissions. In March 2024, the Biden administration announced that it will provide a $1.5 billion loan to restart the Palisades nuclear power plant in southwestern Michigan. In April 2024, Tokyo Electric Power Company announced that all 872 fuel rods of the No. 7 reactor of the Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture have been loaded, and the power generation is expected to restart in October this year.

It is worth mentioning that in the downstream application of uranium, the vast majority is used in the field of nuclear power. Since last year, international uranium prices (U3O8) have been accelerating. As of the beginning of this year, it has once again surpassed $100/pound, reaching a new high in nearly 16 years; currently, although uranium prices have fallen somewhat, they are still around 80 U.S. dollars/pound, which is still at a historically high level.

Uranium prices (U3O8) trend on the Chicago Mercantile Exchange since 2008. Data source: Eikon.

(In the article, Zhang Yu is a pseudonym).