Arnaud Lefevre-Baril is managing director of Dynabond Powertech, a firm that advises several high-profile nuclear firms in China. He spoke with China Economic Review about the state of China’s nuclear energy industry.
Q: Why is China so interested in developing nuclear energy now?
A: For many years, China’s government did not invest in the long-term development of nuclear energy, and chose to focus on coal instead. That was their mistake. Now their problem is that they are too reliant on coal, and it’s unsustainable. So they said: “Let’s see what we can do about reliable electricity. What is cheap, controllable and good for the environment?” They looked at all of the options and realized that nuclear was a strong contender.
Q: What are the challenges for China’s nuclear industry?
A: China has focused more on the construction of nuclear power plants and not so much on research and development. If you look at the industries in France and the US, they have strong design and R&D capacity. This is very good for foreign companies, which can sell their capabilities to the Chinese nuclear industry. That’s why our European clients are making so much money.
Q: What has been your impression of Chinese nuclear facilities?
A: If you go to any Chinese nuclear engineering company, you will meet either young graduates or people older than 45. It’s a human resources issue: Back in the day a lot of engineers were studying nuclear, but then everyone went into coal. Now they’re coming back, but there is a gap. There is no middle management like they have in Europe. This creates a problem of culture and transmission of knowledge.
Q: Is safety a concern?
A: China’s safety authority doesn’t have the same budget as its counterparts in the US and France. It is very powerful, but it has budgetary and human resources difficulties. They can build new facilities, but who is going to inspect and enforce regulations to prevent problems? China is able to train many new safety inspectors, but safety needs experienced experts, not new graduates. Furthermore, there is no official information regarding incidents at nuclear plants. In France, the public has easy access to such information.
Q: What advice would you have for French firms in particular?
A: China is clearly cutting costs for nuclear reactors through the localization of equipment and civil engineering. So far, French companies have been doing well thanks to Areva (CEI.Euronext) and Alstom (ALO.Euronext), but if they don’t localize in China, I think they will have a very short future here. China has been very clear that it wants to build cheaper reactors to meet its energy needs. The best strategy for French companies would be to trust their Chinese counterparts and export cheaper products made with French standards worldwide.