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Cablegate: Guangdong and Fujian Take the Reins of China's Nuclear

VZCZCXRO6456
RR RUEHCN RUEHGH
DE RUEHGZ #0086/01 0490618
ZNR UUUUU ZZH
R 180618Z FEB 10
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 1394
INFO RUEHOO/CHINA POSTS COLLECTIVE 0474
RUEHBJ/AMEMBASSY BEIJING 1147
RUEHGH/AMCONSUL SHANGHAI 0403
RUEHCN/AMCONSUL CHENGDU 0404
RUEHSH/AMCONSUL SHENYANG 0413
RUEHHK/AMCONSUL HONG KONG 0470
RUEHIN/AIT TAIPEI 0346
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0254
RHMFISS/DEPT OF ENERGY WASHINGTON DC 0064
RUEAIIA/CIA WASHDC 0442
RUEKJCS/DIA WASHDC 0438

UNCLAS SECTION 01 OF 03 GUANGZHOU 000086

SENSITIVE
SIPDIS

STATE FOR EAP/CM, EB/ESC, OES/ENV, INR/EAP;
USDOE FOR OFFICE OF THE SECRETARY
USDOE FOR INTERNATIONAL AFFAIRS
USDOE FOR FOSSIL POLICY AND ENERGY
STATE PASS TO NUCLEAR REGULATORY COMMISSION
USTR FOR CHINA OFFICE
BEIJING FOR FCS, ESTH AND DOE
USDOE for Nuclear Energy/Miller, Lyons, Herczeg, Gillespie,
McGinnis
USDOE for NNSA/Baker, Black, Whitney, Huizenga, Bieniawski
USDOE for PI/Sandalow, Yoshida, Cutler, Huangfu

E.O. 12958: N/A
TAGS: TRGY ENRG ETRD EINV PGOV TW CH
SUBJECT: Guangdong and Fujian Take the Reins of China's Nuclear
Renaissance

REF: 09 Guangzhou 080

GUANGZHOU 00000086 001.2 OF 003


(U) This document is sensitive but unclassified. Please protect
accordingly. Not for release outside U.S. government channels. Not
for internet publication.

1. (SBU) Summary: Over one third of the total nuclear generating
capacity set to come online in China by 2020 will likely be
concentrated in two southern provinces: Guangdong and Fujian. Home
of the nation's first nuclear reactors in Daya Bay -- which along
with two units at neighboring Ling Ao power station account for 40%
of China's current nuclear capacity -- Guangdong seeks to achieve a
six-fold increase of capacity up to 24,000 megawatts (MW) by 2020.
Fujian aims to build at least 10,000 MW in the next ten years,
equivalent to 20-25% of the province's total energy needs. Overall,
China plans to expand its nuclear power generating capacity from the
current 9,000 MW to somewhere between 40,000 and 80,000 MW by 2020.
Access to abundant coastal water resources, proximity to megacities
and energy consumption hubs, the lack of indigenous coal resources,
and stable seismic conditions are all factors behind the central
government's plans to scale up nuclear capacity in these two
provinces. A prominent nuclear scientist who returned to China from
the United States in 2008 hopes that Fujian may become a center for
nuclear research cooperation with foreign countries and possibly
Taiwan. End summary.

--------------------------------
GUANGDONG SEEKS SIXFOLD INCREASE
--------------------------------

2. (SBU) Of the 11 nuclear power reactors currently in operation on
the mainland, four are located in Guangdong province, two at Daya
Bay and two other one kilometer away at Ling Ao Phase I. The
combined capacity of these reactors is 3,758MW, representing over
40% of China's total nuclear capacity. With ten additional reactors
approved or under construction and eight more proposed, Guangdong
should easily meet its objective of scaling up nuclear generating
capacity by a factor of six to 24,000MW by 2020, according to Hu
Guangyao, assistant director for general management at the China
Guangdong Nuclear Power Corporation (CGNPC). Among projects
approved and/or under construction, Hu explained to ESTHOff, CGNPC
will build two more 1080MW reactors at Ling Ao Phase II, six 1080 MW
units in Yangjiang and two 1700MW reactors in Taishan (reftel).
Units currently in the proposal phase for Guangdong province include
six 1000MW units at Lufeng and four 1250MW units in Shaoguan, an
inland city.

--------------
WHY GUANGDONG?
--------------

3. (SBU) Proximity and access to coastal water resources is a
crucial factor behind the positioning of so many nuclear reactors in
Guangdong province, a representative of CGNPC told ESTHOff during a
January tour of the Daya Bay nuclear power plant. High levels of
energy consumption in megacities like Guangzhou and Shenzhen
combined with the scarcity of fossil fuel resources like coal and
oil also combine to make nuclear a logical choice for Guangdong.
Stable geological conditions, i.e. low levels of seismic activity,
provide another justification for scaling up nuclear capacity in
this province.

---------------------- --------------------------------
NUCLEAR TO MEET 20-25% OF FUJIAN'S ENERGY NEEDS BY 2020
---------------------- --------------------------------

4. (SBU) Endowed with similar natural and geographical conditions,

GUANGZHOU 00000086 002.2 OF 003


Fujian has equally ambitious plans to expand its nuclear generating
capacity. Starting from zero, the province aims to build ten
reactors and bring 10,000MW of capacity online within the next ten
years, according to Li Ning, Dean of Xiamen's School of Energy
Research. With five reactors already under construction, Li
predicted confidently that nuclear power will supply 20-25% of the
province's energy needs within 5-6 years. Four 1080MW units are
under construction or planned for the coastal city of Ningde while a
total of six 1080MW reactors will be located in Fuqing, another
coastal city near the provincial capital of Fuzhou, according to
published reports. (Note: The World Nuclear Association estimates
that Fujian's planned and proposed nuclear capacity will surpass
13,000MW by 2020. End Note.) Li also told ESTHOff that Fujian has
been selected as the site for commercial demonstration of a
fourth-generation 800MW experimental fast reactor, scheduled to
break ground at the inland city of Sanming in 2012.

-------------------------------------------
WIND, SOLAR NOT RELIABLE SOURCES FOR FUJIAN
-------------------------------------------

5. (SBU) As Fujian seeks to diversify its energy supply by moving
away from reliance on fossil fuels, nuclear power stands out as a
superior alternative to solar and wind, according to Li. One reason
the province's investment to develop its nuclear capacity exceeds
its investment in renewables is the weak potential of wind and solar
power due to the relative shortage of natural sun and wind
resources. The development potential of solar power, in particular,
is also hindered by the lack of a regulatory framework that provides
incentives for individuals to purchase solar panels, a point that
was stressed at a meeting with a top manager at Fengwei Energy
Technology Co. in Xiamen. The lack of direct government subsidies
for individual purchasers is one challenge but the biggest obstacle
is the inability for solar panel owners to realize a quicker return
on their investment by selling surplus electricity back to the local
power grid. Wind power has even less potential in the near to
medium-term in Fujian, the manager said, which may explain the fact
that only one wind turbine producer in the entire province - XEMC
Datang Wind Power Company in Zhangzhou - is capable of manufacturing
MW-class turbines.

---------------- -----------------------------------
WESTERN STRAIT - FOCAL POINT FOR NUCLEAR DEVELOPMENT
---------------- -----------------------------------

6. (SBU) Li Ning of the Xiamen Energy Research Institute commented
that the completion of ten nuclear reactors in Fujian by 2020
combined with the eight existing reactors in Taiwan will transform
the Taiwan Strait into the focal point of China's nuclear
development. In order to advance nuclear development in this zone,
Li has proposed the establishment of a Western Strait Nuclear Power
Technology Research Center at Xiamen University's new Xiangan
campus. The goal of the research center would be to provide a venue
for "high-level collaboration with elite research institutions and
corporations both at home (China) and abroad." Li asserted that
future U.S.-China nuclear technology joint demonstration projects
should move beyond Beijing and Shanghai to cities like Xiamen. This
would have the added benefit of assisting development of the Western
Strait Economic Zone, which the central government has established
in Fujian, and increasing nuclear cooperation with Taiwan, according
to Li. (Note: Before agreeing to return to China to fill an
"expertise gap" in nuclear technology, Li was associate director of
the Lawrence Berkley National Laboratory in the United States. In
addition to his current position at the research institute, Li also
serves as director of Asian development for the Bill Gates-invested
nuclear innovation outfit TerraPower. End note.)


GUANGZHOU 00000086 003.2 OF 003


-----------------------------------
PUBLIC OPPOSITION STILL A CHALLENGE
-----------------------------------

7. (SBU) Hu of CGNPC told ESTHOFF that his company had encountered
local opposition to the construction of the nuclear power stations
proposed for Shaoguan and Lufeng in Guangdong province. Although he
did appear reluctant to discuss it, Hu told us that under Chinese
law nuclear companies like CGNPC must obtain local government
approval before proceeding with a project. He pointed out that
CGNPC had tried to increase public support for nuclear power plants
by holding exhibitions to popularize nuclear science and by inviting
residents of these cities to visit existing plants to assuage their
safety concerns.

GOLDBECK

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