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Message: More Nuclear Power for China -Nov. 27 - China reaches out to France

More Nuclear Power for China -Nov. 27 - China reaches out to France

posted on Nov 27, 2007 02:36PM

Areva Sees More Deals in China

By EMMA VANDORE AP Business Writer
© 2007 The Associated Press

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PARIS — French nuclear engineering company Areva SA hopes to sell as many as six additional third-generation nuclear reactors to China following its record $11.9 billion order this week to build and supply fuel for two, a top executive said Tuesday.

"The deal that we put in place is a considerable operation which goes much further than the sale of two reactors, which is already a lot," Arnaud de Bourayne, president of Areva China, told The Associated Press in an interview.

"In our perspective, the first series could go to four to six additional reactors."

In an announcement Monday designed to coincide with President Nicolas Sarkozy's state visit to China, Areva said its Framatome subsidiary will build two, third-generation EPR pressurized water reactors at Taishan in Guangdong province.

The contract between Areva and state-run China Guangdong Nuclear Power Corp. also calls on the French company to provide uranium through 2026 to fuel the reactors, which will boost capacity by 3,400 megawatts.

With its massive and growing energy needs, China is a key market for nuclear industry players gearing for a recovery following accidents at Three Mile Island in the U.S. in 1979 and at Chernobyl in the Soviet Union in 1987.

"The market in China and the rest of Asia is very large," said Barry Abramson, an analyst and portfolio manager at GAMCO Investors Inc. in Rye, New York. "There could be a lot more orders."

China is the world's second-largest power consumer after the United States and the third-largest oil importer. Government plans call for nuclear plants to supply 4 percent of China's power needs by 2020, up from 2 percent last year.

The nation has 11 nuclear reactors in operation, all based on technology one generation behind the new Areva model. Three were built with Chinese technology, while others use Russian, French or Canadian know-how.

Lacking sufficiently developed nuclear power generation technologies of its own, China is relying on foreign expertise to build its third-generation nuclear facilities.

The State Nuclear Power Technology Corp. of China, which was set up in 2002, had initially sought bids from Areva, Westinghouse and Russia's Atomstroyexport.

Westinghouse Electric Co. signed deals in July to build four of its third-generation AP1000 reactors in China, which competes with Areva's EPR. Both deals include the sharing of third-generation technology with China.

The nation's confidence in nuclear energy could influence other countries, said Luis Echavarri, director-general of the Paris-based Nuclear Energy Agency.

"China is going nuclear with very important investments. Other countries are going to be interested by their interest," he told the AP.

Luc Oursel, president and chief executive of Areva Nuclear Power, said the state-owned nuclear engineering company is in talks with Indonesia, Thailand and Vietnam over deals that could be signed in three to five years.

The nuclear industry in Asia didn't suffer the kind of public backlash that sent it into decline in the U.S. and Europe, Abramson said.

The EPR reactor uses improved safety technology and has evolved from well-proven reactors used for years in France and Germany, which Areva says guarantee a "fully mastered technology."

As the memory of nuclear accidents fades and environmental concerns gain strength, decision-makers in the West appear ready to change their minds.

"It's only a matter of time before we see a big order" from a large Western nation which would signal "the reawakening or rebirth" of the industry, said Abramson.

But this nuclear renaissance faces challenges _ not least financing the multibillion dollar plants amid a credit crunch on financial markets. Construction costs are rising due to growing global demand for raw materials. And activism, an accident or terrorist attack could stoke public opposition.

To strengthen its hand, the nuclear industry is pushing legislation in the U.S. to expand federal loan guarantees, available for 80 percent of plant costs.

Entergy Corp., Dominion Resources Inc., Exelon Corp. and the Tennessee Valley Authority are expected to be among the first to seek regulatory approval to build new plants in the United States. Constellation Energy Group has already filed a partial application with the Nuclear Regulatory Commission, which expects up to seven requests this year and 28 by 2009. The first plants could be online by 2014 or 2015.

European countries are weighing up replacing or phasing out older plants. In Britain, the government wants to decide this year whether to support a new generation of nuclear power stations, backed by former prime minister Tony Blair.

"More and more decision makers are coming out in favor of developing nuclear power programs," said Mycle Schneider, an independent nuclear consultant. "But public opinion remains skeptical."


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