The Zhitong Finance App learned that in the process of clean and low-carbon transformation of China's energy system, nuclear energy, on the one hand, needs to use its advantages such as low emissions, stable and reliable energy supply, ensure stable operation of power grids, and support the consumption of new energy generation to promote decarbonization of the power system; on the other hand, it transcends its role as a power supply and plays an important role in various fields of comprehensive non-electricity utilization such as hydrogen production, district heating, and seawater desalination. In terms of targets, it is recommended to focus on nuclear power operators China General Nuclear Power (003816.SZ,01816) and China Nuclear Power (601985.SH); nuclear power equipment vendors: Dongfang Electric (600875.SH), Jiadian (000922.SZ), Jingye Intelligence (688290.SH), China Nuclear Technology (000777.SZ); nuclear technology applications: CGN (000881.SZ), China Tongzhu (01763).

China's Energy System: Clean and Low-Carbon Transition, Repositioning Nuclear Energy

China's nuclear power industry is developing rapidly, helping to decarbonize the power system. In the global nuclear power industry pattern, China's nuclear power scale already ranks among the highest in the world. At the end of 2023, it is the third largest installed capacity in the world (57.03 million kilowatts) and the world's largest installed capacity under construction (30.3 million kilowatts). With the orderly commissioning of nuclear power under construction, China is expected to become number one in the world by 2030. With the development of technology, China's nuclear energy needs to go beyond the role of only providing electricity to help energy-intensive industries reduce emissions and carbon in various fields of comprehensive non-electricity utilization such as nuclear hydrogen production, district heating, and seawater desalination.

What are the directions for the comprehensive utilization of nuclear energy in China? What's the progress?

Focusing on China, China's comprehensive use of nuclear energy has successively achieved breakthroughs in the fields of heating, industrial heating, and isotope R&D and production:

In terms of isotopes, Qinshan Nuclear Power has the only commercial heavy water reactor in China, and already has production capacity for industrial cobalt-60, medical cobalt-60, and carbon-14 isotopes.

In terms of district heating, China has carried out large-scale nuclear power plant heating and steam supply demonstrations. As of 2023, Zhongshan Donghai Nuclear Power, Zhejiang Qinshan Nuclear Power, and Liaoning Hongyanhe Nuclear Power have achieved 5.59 million square meters of nuclear energy heating. Using nuclear energy heating to replace traditional coal-fired heating can greatly reduce environmental pollution and is more economical.

In terms of industrial steam supply, the Tianwan Nuclear Power Plant steam power supply project, the first domestic nuclear energy heating project, is expected to be officially put into operation for steam supply in June 2024. From an economic point of view, the thermal price of a nuclear power unit cogeneration plant is about 30-40 yuan/GJ (excluding investment outside the factory). When the price of thermal coal is 1,000 yuan/ton or more, nuclear energy heating has a cost advantage.

In terms of seawater desalination, the seawater desalination systems already built and under construction in China have a cumulative seawater desalination capacity of about 600,000 tons/day, which are mainly used to provide fresh water in factory areas. In terms of economy, the cost of reverse osmosis seawater desalination for large nuclear power plants is about 5-6 yuan/ton, which is comparable to the cost of commercial seawater desalination projects.

In terms of hydrogen production from nuclear energy, in 2021, Tsinghua University organized Huaneng and CNNC to establish the “High Temperature Air Cooled Reactor Carbon Neutralization Hydrogen Production Industry Technology Alliance” to form a demonstration project for hydrogen production from high-temperature reactors in 2022; in 2022, Donghua Energy and China Nuclear Power jointly funded the establishment of Maoming Green Energy to promote large-scale industrial hydrogen milling in high-temperature air-cooled reactor projects.

Risk warning: Policy implementation falls short of expectations, electricity demand falls short of expectations, risk of electricity price reduction, low expectations for nuclear power approval, risk of nuclear accidents, sharp fluctuations in uranium fuel prices, etc.