Argentina Signs $8B Deal for China’s Hualong One PWR

  • Argentina Signs $8B Deal for China’s Hualong One PWR
  • OPINION – Why Argentina’s Nuclear Deal with China May Not Be in Its Best Interests
  • UK / Regulators Announce Approval Of Chinese Hualong Nuclear Power Plant
  • Brazil / Eletrobras Signs Contract To Restart Work On Angra-3 Nuclear Plant

Argentina Signs $8B Deal for China’s Hualong One PWR

h one(NucNet contributed to this report) State companies Nucleoeléctrica Argentina and China National Nuclear Corporation (CNNC) have signed an engineering, procurement and construction (EPC) contract for construction of a China-supplied HPR1000 nuclear power plant at what will become the Atucha III nuclear power station.

The cost of the project is estimated to be $8 billion with China providing 85% of the costs. A  key remaining hurdle, and it’s a big one, is financing Argentina’s 15% share worth $1.2 billion.

The country owes the International Monetary Fund the huge sum of $45 billion.  Reuters reports that the country defaulted to private lenders in 2017.

The New York Times reported in April 2021, “Liberating Argentina from stagnation and inflation is an objective that has evaded the country’s leaders for decades. In a country that has defaulted on its sovereign debt no fewer than nine times, skepticism perpetually dogs national fortunes by limiting investment.”

For the new plant to go ahead, policy level and technical working level authorizations are needed from both countries, along with key financial and technology transfer agreements.

In a joint statement last week Nucleoeléctrica Argentina and CNNC said nuclear energy is a clean energy source that has proven to be part of the solution to the difficult and complex environmental challenges that the world is facing.

The project has plenty of bureaucratic process and paperwork ahead of it before it breaks ground including signing off on financial terms and conditions, local supplier deals, and technology transfer agreements.

China is expected to demand that it provide the fuel for its reactor which will likely have a 60-year service life. Assuming there will be fuel outages every 18 months, that works out to 40 change outs of fuel elements in the core. It has a 177 assembly core design.  The Hualong One power output will be 1,170 MWe gross, 1,090 MWe net.

The Generation III HPR1000 planned for Atucha III  is an indigenous pressurized water reactor which incorporates elements of CNNC’s ACP1000 and CGN’s ACPR1000+ reactor designs. The official announcement in Argentina touted the 1,200 MWe gross rating.

HPR1000,_cooling_systems_schemata

Schematic of CNNC Hualong One. Image: CNNC

China first offered the deal some years ago. The Atucha III project in Buenos Aires province is the result of economic and investment agreements signed with China that go as far back as 2014 along with a construction agreement for a pressurized water reactor unit signed in 2015.

Progress on the nuclear deal between the two key trading partners stalled since it was first negotiated by the administration of former president Cristina Fernandez, a left-wing populist who left office in 2015 after striking a number of deals with China. Argentina has also considered a proposal in 2015 from Rosatom for a 1000 MWe VVER. So far, that deal has not progressed past the signoff of the original high level MOU.

Argentina has three operating commercial power reactors. The plants include a CANDU unit at the Embalse nuclear station and two Siemens KWU-designed pressurized heavy water reactors units (PHWRs) at Atucha. The provide about 8% of the country’s electricity,.  The new reactor will be installed in the town of Lima in the province of Buenos Aires.

Slow Progress on an SMR

carem 25Argentina is also building a domestically designed and developed 25-MW Carem small modular pressurized water reactor unit (SMR) at the Atucha site. Progress on the SMR has been fitful at best with long delays caused by contractor disputes with the government over delays in making payments. In November 2021 a new contract was signed to restart work on the project.

Construction of the Carem-25 plant began in February 2014. However, the project was suspended in 2019 because of what Buenos Aires called “breaches by contractor companies.” In November 2021, the government said Nucleoeléctrica had signed an agreement with construction company Henisa Sudamericana for the project to go ahead.

At least 70% of the components and related services for CAREM-25 are to be sourced from Argentine companies which makes it an engine of job creation. The commercial model envisaged by CNEA as the basis of a muti-reactor plant would have a higher power of between 100 and 120 MWe. (Design specifications table: IAEA)

Hualong One Market Share

China has 11 Hualong One units listed by the International Atomic Energy Agency as under construction at six sites – one at Fuqing and two each at Zhangzhou, Taipingling, Fangchenggang, Changjiang and Sanaocun (also known as Zhejiang Sanao).

In January 2021, Fuqing-5 became the first Hualong One unit to begin commercial operation. A second unit at the site, Fuqing-6, was connected to the national grid on 1 January.

The Kanupp-2 and -3 units (also known as Karachi-2 and -3) in Pakistan are the only overseas nuclear plant projects using the technology. Kanupp-2 became the first overseas Hualong One unit to begin commercial operation in May 2021. Fuel loading was completed at Kanupp-3 in January 2022.

Argentina could become only the second country outside China to commit to the Hualong One reactor technology. Pakistan has one unit already in commercial operation and one nearing completion.

& & &

OPINION – Why Argentina’s Nuclear Deal with China May Not Be in Its Best Interests

cautionArgentina is making a serious technical mistake in signing a contract to build the Chinese design instead of a third CANDU type PHWR which uses natural uranium.

The reasons are that country already has extensive experience with PHWR reactors, Atucha I & II, and it has the uranium resources and fuel processing/fabrication capabilities to supply a new one for a 60-year service life.

The World Nuclear Association, in its profile of Argentina’s nuclear energy infrastructure, wrote that all of Argentina’s operating nuclear power capacity, and Atucha 3, are PHWRs, hence they need little or no enrichment for the fuel.

Production of fuel cladding is undertaken by CNEA subsidiaries. Fuel assemblies are supplied by Combustibles Nucleares Argentinos (CONUAR) SA, also a CNEA subsidiary, located at the Ezeiza Centre near Buenos Aires. The fuel fabrication plant has a capacity of 160 tHM/yr for Atucha-type fuel and CANDU fuel bundles.

argentinanukes

By signing an agreement to build a Chinese Hualong One PWR type design, Argentina will be obligated and dependent on China for fuel and operations of the reactor for the next 60 years which is a serious liability in terms of energy security.  It is unlikely that China would license the production of Hualong One fuel to Argentina.

China has two CANDU type reactors and is capable of building them for export by partnering with the successor to AECL which is SNC Lavalin. In 2014 SNC Lavalin signed an agreement with CNNC to build CANDU reactors for export.

Chinese state owner enterprises have previously developed an agreement with this firm in a proposal to complete Romania’s CANDU units Cernavoda #3 & #4.  Later, China swapped out the offer of  completing the two CANDU units proposing instead to build a Hualong One. The proposal was not accepted by the Romanian nuclear utility and negotiations on any future deals were scrapped following political pressure from the U.S. In December 2021 SNC Lavalin got its foot back in the Romanian nuclear industry with an $8M deal to do design work to complete the two CANDU units.

However, as part of CNNC’s export policy to position the Hualong One as the primary offering to a western nation, China was persistent in pushing its PWR with Argentina and won the business with its design by offering to cover 85% of the costs.

The quoted price of $8 billion for a 1,000 MWe PWR is significantly above current costs for similar reactors. It is unclear why China is pricing the reactor at this level and why Argentina’s government is accepting it.

Even with the cost of importing from China most of the significant nuclear components, such as the reactor pressure vessel, steam generator, and turbines, the extra cost isn’t justified. Is there something else in the deal besides the reactor that is driving up its price? English language news media reports from Argentina indicate that in addition to the nuclear deal, a $23B package of projects funded by China’s ‘Belt & Road’ program were inked giving China its first foothold with that effort in South America. About half of the projects, or about $12B, had previously been announced.

While China has offered eight years of grace on the debt, that is more than enough time to build the reactor, and it puts China at risk at that end of that period of Argentina not being able to assume debt service for its $1.2 billion share due to its terrible financial condition.

In effect, it could become a de facto nationalization of the Chinese reactor. Note that in proving 85% of the financing China is more or less giving the reactor away to score points on the global market share scoreboard. These extremely favorable financial terms aren’t a first for state owned enterprises.

Russia’s Rosatom in 2018 similarly offered Egypt 85% financing to build four 1,200 MWe VVER PWR type reactors. At $5000/Kw, the 1200 MWe VVERs, which are the most advanced in Rosatom’s catalog, come in at $6 billion each or $24 billion for the reactors. Egypt’s share at 15% would be about $3.6 billion. Despite several years of preparatory work, the project has not yet broken ground. The World Nuclear Association reports that the first construction permit is now scheduled for release in July 2022. It will likely take a full decade to complete and commission all four units.

Not included in these calculations are the cost of fuel for all four units for 60 years, switch yard gear, grid improvements to deliver electricity to customers, and other infrastructure upgrades for the sites and related transportation corridors to deliver components, suppliers, and the workforce. It is unclear whether Argentina has taken these types of non-nuclear costs into account in making its deal with China.

Argentina’s on-and-off commitment to complete the CAREM 25 MWe small modular reactor (SMR) for export is also a serious mistake as it could be successful especially if it can be brought to market sooner rather than later.  By the end of this decade there will be at least half a dozen competitors on the global market making it more difficult to sell the unit.

& & &

UK / Regulators Announce Approval Of Chinese Hualong Nuclear Power Plant

approved(NucNet) The UK’s regulatory safety and environmental agencies have confirmed that the UK Hualong pressurized water reactor, or UK HPR1000, is suitable for construction in the UK, paving the way for the indigenous Chinese nuclear plant to potentially be built at the planned Bradwell B site in Essex. The UK HPR1000 is based on the Hualong One power plant, designed by China General Nuclear Group (CGN).

The Office for Nuclear Regulation ) and the Environment Agency said they had completed an in-depth assessment of the nuclear reactor design and approved it subject to licensing, planning permission and environmental permits. This means it cleared the UK’s arduous, expensive, four-year long process of safety design review.

Mark Foy, ONR’s chief nuclear inspector, said the UK HPR1000 design has been assessed against the high levels of safety and security expected in the UK and issuing the design acceptance confirmation – after rigorous and detailed assessments undertaken by a wide range of my specialist inspectors – means “we consider the UK HPR1000 design is suitable for deployment in the UK”.

In October 2015, CGN, one of the China’s three state-owned larger nuclear enterprises, agreed with EDF to jointly invest in, construct, and operate two nuclear reactors at Hinkley Point C in Somerset, southwest England. The EPR reactor design is provided by EDF. CGN  took a 30% equity stake in the project.

However, the Hinkley Point C deal with EDF also includes an agreement to collaborate towards constructing a Hualong One reactor at Bradwell B in Essex, southeast England. This was part of the deal which gave CGN entry into the UK nuclear market with the intention of demonstrating the Chinese nuclear technology was suitable for use in western nations. China developed the Hualong One as a rival to other reactor technologies competing for overseas orders, including the Westinghouse-developed AP1000 and France’s EPR technology.

Uncertainty surrounds the Bradwell B project with the UK government said to be reconsidering China’s role because of security concerns.  Separately, UK PM Boris Johnson recently approved funding of $100M for the Sizewell C project in an effort to give EDF, which will eventually sign to build the twin 1600 MWe EPRs, time to find western investors to take the place of CGN’s 20% equity stake in that project.

& & &

Brazil / Eletrobras Signs Contract To Restart Work On Angra-3 Nuclear Plant

brazil-nuclear-1(NucNet) Brazilian state-run power company Eletrobras has signed a contract to restart the Angra-3 nuclear power plant project in Rio de Janeiro state.

According to a securities filing, the contract was signed between the company’s Eletronuclear subsidiary and a consortium formed by Ferreira Guedes, Matricial and ADtranz.

Eletronuclear announced in July 2021 that the consortium had won the tender with a bid of $56.1M. The plan for completion of the unit includes finishing the concrete superstructure of the reactor building, closure of the containment structure and installation of a used fuel pool, polar bridge and the semi-gantry crane. According to Eletronuclear, almost 47% of civil work at the site had been completed in 2014. So far, about $1.6B has been spent on the project, press reports said.

Construction of Angra-3, a 1,245-MW Siemens/KWU pressurized water reactor unit, began in 1984 but was halted in 1986 because of a lack of financing. In 2010, a construction permit was reissued by the authorities, but the project was suspended again in 2015 because of financing concerns and corruption investigations that resulted in criminal convictions of officials from Electronuclear and its contractors..

Brazil has two operational nuclear plants, Angra-1 and Angra-2, which provide around 2.7% of its electricity production.

Last month Brazil’s Ministry of Mines and Energy (MME) and the Centre for Electric Energy Research (CEPL) signed a cooperation agreement to study sites for new nuclear power plants.

MME said the increased use of nuclear in the Brazilian energy matrix is crucial and the cooperation with CEPL should lead to “the more efficient choice of new nuclear sites in the country,” taking into account energy demand projections, socio-environmental needs and the attraction of new investment to enable construction of the plants. The country’s national energy plan for 2050 estimates an expansion of 8 to 10 GWe of nuclear power.

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2 Responses to Argentina Signs $8B Deal for China’s Hualong One PWR

  1. Brian Nichols says:

    Excellent reporting…as usual. Thanks Dan! I really love all the straight forward facts.

    Like

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