Next Round of AP1000s in China Will Actually Be CAP1000s With No Westinghouse Involvement
A little more than three years ago, I wrote an article expressing my belief that the four AP100s that Westinghouse sold to China in a landmark deal signed in December 2006 would be the only four reactors of that model that Westinghouse ever sold in China. In fact, I wondered at the time if Westinghouse would end up competing against its Chinese pupils in the international market. The post was titled China may export the technology learned by building modern reactors.
The first stage of the prediction has been achieved. Yesterday, China announced a framework agreement for the construction of two units of Westinghouse designed AP1000s. Though the Shaw Group, a partial Westinghouse owner, will be participating in the deal, there is apparently no specified role for the plant designer. Here is a quote from a World Nuclear News article titled Contracts for the next Chinese AP1000s:
A framework has been established for two AP1000 units at Xianning as well as a factory for their pre-assembled modules. Shaw will continue its role in support, but Westinghouse has no major involvement.
A round of contracts signed yesterday marked a triple-first for Chinese nuclear. The first inland AP1000 project at Xianning, Hubei province; the first AP1000 project for utility China Guangdong Nuclear Power Corporation (CGNPC) and the country’s move to the next phase of its self-sufficiency plan.
Four AP1000s were imported from a Westinghouse-Shaw consortium in December 2006 and these are all now mid-construction. That first phase saw Westinghouse and Shaw lead construction and gradually pass know-how to State Nuclear Power Technology Corporation (SNPTC).
Once again, a major US corporation has made a sale, taken technology developed with the assistance of a significant quantity of taxpayer dollars and paid American employees to live overseas to teach their replacements how to perform their skilled jobs. I wonder how long it will take before the Chinese begin offering CAP1000s in a major, UAE-like opportunity for nuclear power plant sales?
If it were possible to import our electricity all the way from Asia, our politicians would welcome that to “solve” the problem of emissions. They already did it with oil and manufactured goods, only electricity has so far been impossible to outsource so far away from the consumer.
The Chinese haven’t shown much interest in exporting their nuclear reactors to other countries. For instance, they made no effort to do so when Vietnam asked for bids on the first two of a planned 13 power stations. The Russians, who are if anything energetic in pursuing export deals, got the job.
One reason may be that the Chinese don’t have the workforce to manage their domestic build and cover export projects. That’s likely the reason why The Shaw Group has a contract to work on the new domestic versions of the AP1000.
This was the deal or plan, although a pretty bad deal in my opinion, from the start wasn’t it? Has Westinghouse made any statements about this? And if this was the agreement, hopefully it included some clauses in regards to their ability to market the design elsewhere.
In my view, the plant designer doesn’t need to be involved in every production of their design, but they deserve some kind of royalty at least until their patents run out. That’s just good business ethics.
China may produce consumer goods well enough, but when it comes to large capital purchases – like cars – or even simple yet critical materials that need to firmly meet specification, the first time, and every time – like drywall – pet food – plumbing materials – electrical wire – it is highly prudent to buy from someone you know has always stood behind their product, and always will stand behind their product.
As such, I don’t exactly think Westinghouse has much to fear from Chinese export of their designs – though I would try to get the royalties they rightfully deserve on the plants the Chinese build for themselves.
Westinghouse is about 80% owned by Toshiba – 67% (Japan), Ishikawajima-Harima Heavy Industries Co., Ltd. – 3% (Japan), Kazatomprom – 10% (Kazakhstan). However, 20% of the company is in the hands of Shaw Group out of Louisiana.
Chinese firms are not owners of US manufacturers or NRC certified designs. However, part of the deal for the first four AP-1000s sold in China is a technology transfer agreement that will allow Chinese manufacturers to produce the design under license without further US involvement.
We should take wise steps to retake the American Nuclear industry by supporting the development of new disruptive American nuclear technology that would re-level the playing field and allow smaller American innovators to compete. The overwhelming majority of the current NRC certified reactor designs pre-approved for use by US utilities are now owned outright by foreign companies. Profits from sales of the existing NRC certified reactor designs now go to supporting foreign economies and new nuclear manufacturing jobs will be created primarily in those foreign lands. Even if you insist that Westinghouse be paid royalties on the AP-1000 design the majority of the funds received now go to foreign owners.
@Robert Steinhaus – you are correct in your analysis. One more item that people should understand is that the cost of the US NRC certification for the ABWR, the System 80 (the basis for the South Korean designs), and the AP1000 was mostly paid by the US DOE. The fact that Westinghouse is mostly foreign owned dates back to the time when the old Westinghouse turned itself into CBS, which was one of its subsidiaries and then spun off just the nuclear parts of the business using the brand name of Westinghouse. That spin out was then sold to British Nuclear Fuels Limited (BNFL).
BNFL made a pretty significant profit when it sold to Toshiba.
* The US owes a lot of money to China, and will continue to require the purchase of US government bonds by China. With that comes Chinese influence over US policy, incl. energy policy.
* China is developing an export industry for nuclear energy, as it has done for wind energy. The “Chinese wind farm” in Texas is an example of a Chinese-co-financed energy investment that relied on wind turbines built in China, securing manufacturing jobs in China.
* The US will see major changes in the way it produces energy. China, with good reason, says that the majority of the climate/fossil energy problem was created by the industrialized West, which therefore needs to go ahead and decarbonize.
Are we connecting these dots yet ? China will be building and owning nuclear plants in the US. It’s only a matter of time, and it’s probably a good thing.
I think China will *eventually* start exporting their CAPs (1150, 1400, 1700MWs). They are building up, as Rod noted, their human enegineering resources and components first before they delve into the export market. This is what is behind their announcement this week of their new “Nuclear City” with huge engineering training facilities, component manufacturing and easily accessible new NPPs in the vincinity. It is simply wrong to count them out But they are building the majority of the worlds NPPs and thus their own internal market is what is key.
Secondly, it’s not true that their products are all like their dry wall, baby food, etc. Like in the US, it depends on the industry and the kind of regulations and culture go into that industry. Almost all the problems with Chinese commodity production with regards to failures and safety stem from privatly owned, get-rich-quick type of unregulated manufacture and distribution. This includes their baby formula where Chinese food regs are practically non-existence. I live in a heavily Asian area of the US (the largest in fact) and NO ONE buys food from China, it’s simply not done as overseas Chinese simply don’t trust it.
But this doesn’t stop Boeing Aircraft from purchasing FAA approved parts to their new 777 does it? Or literally thousands of important other components for computers, air craft, marine craft, auto and every other industry. This is because US manufacturers *often* have their *own* inspectors onsite, on the ground, inspecting and training Chinese inspectors. I suspect that the state-owned/partnershiped nuclear industry in the PRC is simply held to a much higher standard.
The US is currently shipping nuclear components to Asia. I expect this to expand. That Westinghouse is not a US company anymore doesn’t even raise an eyebrow with me. Too many companies are ‘transnational’ in ownership now so it hardly really makes a difference. Even if this company was 100% owned, it’s not out of the question that the same % of engineering, manufacturing and a host of other services would be completely outsourced to…China and other countries. That’s the devil in the details of the religeon known as “Free Trade”. It’s all or nothing.
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