Investing in China's Nuclear Ambition via its Duopoly: A Look at CNNC and CGN Power
The human race has a love-hate relationship with nuclear energy. Although it provides a substantial amount of energy that is both cheap and clean, a meltdown can cause severe harm to humans. Nevertheless, as we move towards more renewable energy sources, nuclear power will continue to play a crucial role in the energy transition, alongside solar, wind, and hydro. Each source has its role, given that solar power requires sunlight and does not produce energy at night, while wind power needs sufficient coastline or large open spaces—resources not all countries possess. Hydro power, on the other hand, depends on large rivers. Nuclear power is the most consistent and efficient of all. A typical solar or wind farm would require 75 and 360 times more space, respectively, than an equivalent nuclear plant to generate the same amount of energy.
As of the end of 2023, the U.S. has the largest number of operational nuclear reactors, with China in second place. China has a total of 55 plants in operation, supplying about 5% of the country's electricity. However, the key difference is that China is committed to building more nuclear plants, while most other countries are trying to reduce their reliance on nuclear energy.
Today, China remains dependent on coal as its primary source of power generation. However, coal is a dirty fuel that must be scaled down to align with China’s goal of achieving "peak carbon" emissions by 2030 and becoming "carbon neutral" by 2060. According to China’s blue book on climate matters, the country should accelerate the construction of more nuclear reactor units to meet its decarbonization goals, alongside other renewable sources.
China is planning to construct an additional 24 nuclear plants by 2030, the highest number in the world.
In 2023, China's investment in nuclear power reached a five-year high of 94.9 billion yuan.
China continues to pursue self-sufficiency in the design, construction of nuclear power plants, and production of fuel. This strategy is a response to the U.S. ban on advanced chips against China, highlighting the importance of domestic capabilities. Consequently, it is expected that domestic nuclear companies will dominate the market in the development of nuclear power generation in China.
There are two major nuclear power companies: China National Nuclear Corporation, which operates mainly in Northeast China, and China General Nuclear Power Group, which operates primarily in Southeast China.
China National Nuclear Corporation (CNNC)
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