When Chinese technocrats were drafting the grandiose economic blueprint that would carry the country through 2015, they had no idea what would happen just days after its release. In March 2011 – the same month China launched its 12th Five-Year Plan, which proposed a huge expansion in nuclear power – an earthquake hit off the shores of northern Japan, sending a tsunami over coastal areas, killing more than 12,000 people and putting the island nation on the cusp of a nuclear disaster at its Fukushima plant.
The incident also set in motion an international wave of resistance to nuclear power. Despite its top-down economy, China was not immune to the public discontent surrounding a nuclear threat: Beijing halted approvals on new nuclear projects and ordered a reassessment of existing plants.
The sudden stall in the development of nuclear plants has been a boon for China’s wind and solar energy sector. Wind power output surged past nuclear last year, and government support for the wind and solar has climbed steadily since 2011. The remaining question is whether or not these two renewable energy sources can maintain momentum in the Chinese market as the government gradually allows nuclear development to resume.
Although it’s unclear what the next five-year plan will look like, some industry insiders have predicted that post-Fukushima wariness over nuclear energy will have waned by 2016, allowing China to revamp its program.
New clear days
The hiatus in plant construction was an about-face on China’s nuclear ambitions. China’s last five-year plan – the government’s most important and wide-reaching economic policy statement – called for accelerated construction of reactors across the country, putting China on track to become the world’s largest nuclear power generator. By 2020, it planned to operate more nuclear facilities than the rest of the world combined.
This massive push ground to a halt after the disaster in Japan. “This wasn’t just China, this was everybody that dropped their focus on nuclear power,” Lin Boqiang, director of Xiamen University’s Center for Energy Economics Research, said of the effects of the Fukushima incident. “As long as the overall environment doesn’t deteriorate, it will pick back up again. But the time when this will happen is not clear.”
At present, nearly 30 nuclear plants are under development in China. Yet the landscape has changed dramatically since 2011. China allowed some nuclear projects on the coast to resume in October, although at a far slower pace of development, while inland projects remain stopped entirely, Lin said.
The government also increased the technical requirements on unfinished plants, requiring them to adopt the top international standard of nuclear technology, known as “generation 3,” on new plants. But many plants in development are stalled at generation 2.5, according to Lin, and it’s unclear how long they will take to upgrade.
Day in the sun
The 12th Five-Year Plan also pointed to solar and wind power as sectors for high growth through 2015. But the unforeseen decline in nuclear energy development after the Japan disaster helped put further emphasis on other forms of alternative energy, namely wind.
“If there was no incident [at Fukushima], the nuclear power output would be at least the same as wind power now,” said Sun Xi, an analyst at environmental and governance research firm Sustainalytics. “The reduction of nuclear projects really gave the opportunity to the wind power.”
The opportunity has translated into huge growth for the wind power sector, especially massive wind farms in China’s northwest. In 2006, wind turbines produced less than five terawatt hours of electricity a year in China, while nuclear produced about 60 terawatt hours, according to data from Washington DC-based think tank Earth Policy Institute. By 2012, wind and nuclear were producing 100 terawatt hours apiece, and wind energy has since surpassed atomic power.
Solar energy capacity is also ramping up, although progress has been slower than with wind. In 2012, the country produced 7 gigawatt/hours of solar power, and China will look to add 10 more this year. In December, state-run Xinhua News Agency said high level officials were considering doubling the 2015 goal of 20 gigawatt/hours of solar power to 40.
“There are significant efforts to develop wind and solar right now,” said Timothy Lam, a wind and solar analyst at Citi Research in Hong Kong. “That is a clear signal that the Chinese government is looking at these renewable energies and will continue to encourage them at sensible prices.”
China’s renewable energy goals are reachable, but analysts said the market will first need to weed out serious problems.
Government support for the sector has brought on great oversupply of solar and wind equipment in China, which has led to falling margins, especially for solar companies. Chinese solar maker Suntech, whose primary subsidiary filed for bankruptcy last week, deliberately held down the price of solar panels in order to gain market share. Such practices have made the sector largely unsustainable, and experts said the industry must eliminate superfluous manufacturing before it can be revived.
The quality of China’s solar and wind products is also highly questionable. A lack of technical skill in the market has created the same pollution the government has tried to reduce through its support of alternative energy, Sun said. The industry should push for these initiatives now before the government shifts its focus back toward nuclear power.
Although China plans to continue expanding its wind and solar capacity far into the future, some insiders have said that nuclear power could be back on the agenda with introduction of the next five-year plan in 2016. Hu Yu, chairman of China Guangdong Nuclear Power Holding, said last week that although China’s goals for nuclear power have stalled during the current five-year economic planning period, starting them again would “not be a problem” during the next half decade.
If the memory of Fukushima wanes, powerful stakeholders in China’s state-owned nuclear power sector may put China’s atomic ambitions back on track. Before long, Beijing’s attention could revert back to nuclear power, and wind and solar could lose some of government support. Proponents of wind and solar should push to straighten out those markets before this window of opportunity closes.