It sometimes surprises me just how long it takes the advertiser supported media to recognize an important story. This morning, my Google News Alert indicated that MSNBC and Bloomberg had both noticed that Westinghouse had transferred 75,000 documents relating to the design and construction of AP1000 nuclear reactor plants to China. One of those sources linked to a November 23, 2010 Financial Times report titled US group gives China details of nuclear technology.
Neither one of them linked to a June 2007 article titled China may export technology learned by building modern reactors that warned about the implications of a signed technology transfer agreement that was an integral part of Westinghouse’s sale of four AP1000s in March of 2007.
I guess it is not too surprising that this week’s reports are being portrayed as news since that early warning appeared on an obscure blog run by a guy who is not part of the mainstream media or a recognized contributor to the business press. There is also the distinct possibility that vain Western business leaders are finally waking up to the fact that it is a bad idea to sell the end results of decades worth of creative thinking to a group of expert copiers who have access to a vast number of extremely poor people willing to work hard for wages that would lead to starvation in most developed countries.
My use of the word “vain” in the above is justified by quotes like this one from an analyst that seems to believe that Westinghouse was perfectly correct to sell the technology that they developed with considerable assistance from American taxpayers.
“About half of the reactors planned in China are based on the AP1000 and this is very complex technology to master,” according to Panjwani. “This is a case of Westinghouse deciding to get involved in the biggest nuclear power market in the world and also assuming that it will take China some considerable time to fully master this technology.”
The funny thing is that nuclear reactor engineering is not really all that different from many other types of large process plant engineering. It is mostly a matter of pumps, valves, pressure vessels, control systems and proper material selection. Picking the right ingredients for long term reliability requires decades worth of expensive research, development and operational experience, but not if someone hands you the answers in a well-organized and searchable digital library after holding your hand for the first few projects.
Perhaps the most complex skill to master in building new nuclear power plants is following the labyrinth of rules and regulations that have been developed in the US under the influence of companies that profit by raising barriers to entry for new competitors and by people who are nervous about allowing nuclear energy to expand at all. The Chinese have little motivation to master that particular skill. I do not expect to see Chinese made reactors competing for shares of the US market. There are much more lucrative opportunities around the world right now.
There are a few little tricks of the trade that are quite difficult to master – like producing reactor coolant pumps that do not leak and do not need to be replaced very often – but those are actually quite minor components in the big scheme of multi-billion dollar manufacturing and construction projects. Once representatives of a country that has no tradition of protecting intellectual property have the majority of the technology on their computer hard drives and have practiced the necessary steps involved, there is really nothing to stop them from taking over the market. They will perform the tasks that could have involved tens of thousands of American workers at higher than average wages. Business leaders may benefit by some concentrated rewards, but the overall effect is a reduction in American prosperity.
This quote from the Financial Times story provides a little flavor of the kind of naive attitude that has allowed American business leaders to sell off useful and expensive to develop technology for what are really quite small amounts of money.
Westinghouse has shared technology with customers before. “I’ve been with Westinghouse over 40 years and in my early days we were exchanging technology with the French,” Mr Allen said when asked about the possibility of Chinese copying of Westinghouse technology.
The difference there was that the French had a long tradition of respecting intellectual property rights and they paid their license fees. That Westinghouse sale of Generation II reactor technology to Framatome (an Areva predecessor company) assisted in the development of a formidable competitor, but at least that competitor has determined that becoming a major US employer and building a physical presence in the world’s most lucrative energy market is a smart move. I fear that the CAP1000 manufacturers will not make the same kind of investments here or employ anywhere near as many US citizens.
I guess I am being a bit naive myself. After all, Westinghouse is not even an American company and has not been one for many years. The powerful industrial company that built railroads, electrical switchgear, power plants, and defense equipment morphed into a media company (CBS) during the Clinton Administration. It sold off the nuclear equipment manufacturing business and the Westinghouse brand name to foreign investors in 1998. Why should they care about maximizing returns on investment for the American taxpayers who helped them work out the kinks in Generation III+ light water reactor technology?
Update: (November 26, 2010 0405) There is a story published by the Mail & Guardian Online out of South Africa titled Nukes to the rescue? that supports my contention that Westinghouse and other Western reactor manufacturers are going to loose sales to their Chinese customers, just like they have already lost sales to their South Korean customers.
Eskom has considered increasing nuclear energy output before and was on the brink of signing a deal with either French manufacturer Areva or a US consortium led by Westinghouse in 2008, but pulled back, citing a lack of funding.
But, Adam said, the emergence of South Korea and China as nuclear technology suppliers since then had led to a possible halving of nuclear costs. Whereas Western-manufactured reactors cost between $5,000 and $6,000 per kilowatt capacity installed, a Far East-manufactured reactor would cost between $3,500 and $4,000.
By comparison, the proposed 4,800MW Kusile coal-fired power station to be built in Mpumalanga would cost an estimated $21-billion , which came to $4,375 per kilowatt capacity installed. As such, a Korean reactor cost less per kW of installed capacity than Kusile, Adam said. Although it might still be an expensive technology to set up, the running costs of nuclear were lower than other baseload technologies because of the low volumes of nuclear fuel required.
Adam cited the example of the 1 800MW Koeberg unit , which was the “most profi table in Eskom’s stable”. And South Africa co
uld well look east for its nuclear technology, if recent diplomatic activity is anything to go by.
Agence France Presse reported in October that Deputy President Kgalema Motlanthe was in Korea to sign a nuclear deal, and the Mail & Guardian reported last week that China had offered South Africa nuclear reactors in exchange for its support of China’s position on climate change.