Nuclear power development in Asia Pacific: Opportunities amid challenges

Nuclear power development in the Asia Pacific region

Asia now hosts about one-fourth of operational nuclear power units in the world. As of June 2021, six Asian markets and regions (Japan, South Korea, mainland China, Taiwan, India, and Pakistan) are running 113 reactors, totaling 97.4 GW, over half of which were built before 2011 (see Figure 1). The 2011 Fukushima disaster raised serious concerns about nuclear project safety. Most countries have slowed down the new project approval, and many of the projects that are still under construction have been reviewed and delayed owing to a stricter safety check. Now, ten years since the Fukushima tragedy, all the Asian governments have reconsidered the future of nuclear in their regions.

Figure 1: Nuclear power capacity and number of reactors in the Asia Pacific region, as of June 2021

Diverse trajectories of nuclear power policy across Asia Pacific

Nuclear power development has presented diverse trajectories across the Asia Pacific region in the post- Fukushima era. Active markets have clear nuclear deployment plans and targets in place. Conservative markets have the technical capability and operating plants but are unlikely to approve new reactors, while the inactive markets continue to be hesitant to introduce nuclear power plants owing to technology and safety concerns (see Figure 2).

Figure 2: Major nuclear policies across Asia Pacific region

Who will lead the nuclear power development in Asia?

Mainland China and India are expected to lead Asia's nuclear power development owing to robust power demand and strong environmental pressures. Both countries' markets support nuclear power and set clear installed capacity goals. The governments target 70 GW by 2025 for mainland China and 27.5 GW by 2030 for India.

Active markets of nuclear power development in Asia are scaling up the game

Mainland China and India share many common drivers for nuclear power development and are expected to be the primary promotors of this industry in Asia Pacific. IHS Markit estimates the two populous and rapidly growing markets will likely underpin 32% of the world's total power demand additions during 2021-50. A diversified power supply structure is necessary to meet such a large amount of demand and will avoid substantial environmental stress and fuel supply risks. Increasingly stable, efficient, and low-carbon power supply such as nuclear power will help mitigate these pressures.

Mainland China had 49 operating nuclear power units at the end of 2020, with total capacity of 51,027.16 MW, which was up 5% from 48,751.16 MW a year earlier, following the commissioning of two units with a combined capacity of 2,268 MW, according to the China Nuclear Energy Association (CNEA). Power produced by these units was 5% higher year on year at 366.24 TWh, similar to power produced by burning 104.74 mt of 7,000 kc NAR coal. This accounted for 4.94% of mainland China's total power output, higher than 4.88% in 2019.In addition, the civilian nuclear sector and mastering nuclear technologies are essential to major markets like mainland China and India.

Mainland China calls for a 40% increment (70 GW) in nuclear power in its recent 14th Five-Year Plan (2021-25). Meanwhile, India's nuclear program entered its third phase, which aims to utilize its indigenously developed technology and fuel to scale up the nuclear capacity in the country. India has planned to achieve 27.5 GW of nuclear capacity by 2030.

Pakistan and Bangladesh see nuclear power as a solution to address the increasing intense energy security problems after phasing out coal, with more gas imports predicted. Both markets are highly reliant on gas supply, which saw 43% and 58% in the energy mix, respectively, as of 2019. Nuclear power may reduce the market risk of reliance on a single fuel source by diversifying the energy mix. Pakistan runs five reactors (2,562 MW) and develops KANUPP II & III (1,100 MW) with help from mainland China.

For long-term development, the government enacted "Nuclear Energy Vision 2050" in 2015 and seeks to have 44 GW of nuclear capacity by 2050. The development progress of nuclear projects has been very slow, and Pakistan will likely miss its target set under the 2015 vision. Currently, Pakistan has only 2,200 MW of capacity in the pipeline, which is expected to get commissioned by 2030. Meanwhile, Bangladesh began construction on its first of two reactors with Russian assistance in November 2017 and aims for commercial operation by 2026.

Conservative nuclear power markets in Asia no longer approve new nuclear plants

Japan, South Korea, and Taiwan used to have nuclear as an important power source given the lack of natural resources in the regions. However, with various concerns and anti-nuclear voices raised in the last decade, the three regions have become increasingly conservative about nuclear power and are no longer approving new reactors at present.

Japan is facing a severe challenge in restarting its reactors post-Fukushima. The Nuclear Regulation Authority (NRA) has mandated the electric power companies (EPCOs) to implement stringent safety measures, which effectively shut down all nuclear reactors during fiscal year (FY) 2014 and slowed the restart of many reactors. Reactors' restart has been delayed owing to the additional safety measures, cost, and lengthy review. In 2020, 10 reactors were approved for operation with a total capacity of 9.96 GW. Nuclear accounted for 5% of the generation mix, and more are expected to restart.

On 22nd July 2021, the Japanese government announced a draft proposal for the power mix to be incorporated in the next Basic Energy Plan due to be renewed in FY 2022. The announced power mix included a much stronger share of renewables (36-38% versus 22-24% in the previous policy), but most notably, a sustained level of nuclear (unchanged at 20-22% as in the previous policy). With the ambition to reach net zero by 2050, as well as the newly announced greenhouse gas (GHG) reduction target of 46% versus 2013 levels, nuclear is positioned as a stable, non-carbon dioxide emitting power source that can support renewable growth.

In South Korea, President Moon Jae-in's administration has announced a nuclear reactor phaseout scheme. The Third Energy Master Plan in 2019 states that there will be no new reactors except for those that are currently undergoing construction, and the existing units' technical life would not be prolonged. The construction of the half-built Shin-Kori-5 and -6 reactors will continue and get commissioning in 2022 and 2023, respectively, alongside Shin-Hanul-1 and -2, which are due to come online in 2021 and 2022.

IHS Markit expects the nuclear generation in the fuel mix to fall steadily from 29% in 2020 to 22% by 2030 with reactor retirements. However, this assumption is subjected to the political environment since the opposition People Power Party is a pro-nuclear supporter. With the next presidential election approaching next year and the country facing mounting pressures to raise the 2030 GHG emissions target before the 26th UN Climate Change Conference in November 2021, the country's current stance on nuclear phaseout remains highly uncertain.

Taiwan planned four nuclear power stations in the 1970s. The reactors were completed in succession during 1978-85, but the Lungmen Nuclear Power Plant (LNPP, commonly as the Fourth Nuclear Power Plant) in Gongliao district was mothballed owing to political reasons and never commissioned. The authority is pledged to achieve the "Nuclear-free Homeland" target by 2025.

As of July 2021, three out of eight reactors have retired; the remaining three operating units are approaching their designed technical lifetime and will not be extended. Nevertheless, the dispute over the Lungmen station continues. Whether to reboot the Lungmen plant will be decided in a referendum held in late 2021. IHS Markit believes it is impractical to restart the station because the outdated design no longer complies with the latest safety standards. Retrofitting the nuclear power plant will face fairly high time and money costs, as well as technical challenges.

Inactive markets in Asia Pacific: Nuclear power is the last resort among the Southeast Asians

The rest of the Asia Pacific markets are inactive for nuclear power. None have commercially operating reactors or intend to build one.

Australia is the only G20 country where nuclear power development is prohibited by commonwealth and state legislations. The Victorian and New South Wales (NSW) governments held separate inquiries into nuclear power in 2019, suggesting lifting the nuclear ban for advanced reactors. The conflict arose from the federal government's unwillingness to repeal nuclear bans, as well as submissions opposing nuclear power from conservative state parliaments—South Australia (SA), Tasmania, and Queensland demonstrating that the governments had no intention of doing so. However, no firm decision has been made, and until there is a change, it is unlikely to advance.

The first nuclear power plant in Southeast Asia is the Bataan Nuclear Power Plant built by the Philippines amid the 1973 oil crisis and completed construction in 1984. However, affected by the Three Mile Island accident in 1979 and the Chernobyl accident in 1986, the 621 MW reactor was never commissioned and will not commit in the future. Malaysia used to review nuclear power as an option to meet the increasing power demand in the mid- 2010s. The nuclear power program was abandoned after several deferments by 2018.

There is no nuclear power development in Cambodia at the moment, but the government is showing interest in developing nuclear energy. By the end of July 2021, the Cambodian government signed a memorandum of understanding (MOU) with mainland China and Russia, aiming to boost cooperation on nuclear energy.

To date, Indonesia, Vietnam, and Thailand have built and operated several research reactors, but nuclear energy has remained the last-resort energy source. Apart from the fundamental unaddressed risks in nuclear power plant operation, the Southeast Asian region is also threatened by geological instability—surrounded by the ring of fire (seismic risk). It makes the region reluctant to include nuclear power in its energy mix.

Bottom line: Dilemma as a suspense for the nuclear power's future

Even though it is considered as one of the most reliable and stable power supplies to substitute the traditional non-renewable energy sources which release large amount of greenhouse gases, nuclear power is still struggling at a crossroads for a decade since the Fukushima accident in 2011. The dispute on massive deploying or phasing out nuclear has never faded and even attracted more attention with the world accelerating the process of the low-carbon transition. The only certain thing with the uncertainties of nuclear power development is that they will continue to gain attention and impact the future of nuclear power in Asia Pacific markets.

Posted 14 December 2021 by Choon Gek Khoo, Research Analyst, Gas, Power and Climate Solutions, S&P Global Commodity Insights and

Shan Xue, Senior Research Analyst, IHS Markit

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.