Event:
The executive meeting of the State Council held on April 20, 2022 pointed out that nuclear power should be developed in an orderly manner under the premise of strict supervision and ensuring absolute safety. The three new nuclear power unit projects that have been comprehensively evaluated and reviewed and incorporated into the national plan shall be approved.
Comments:
Establish sound policies and actively develop nuclear power
In the 2021 government work report, it is clearly proposed to “actively and orderly develop nuclear power on the premise of ensuring safety”, which is the first time that “positive” has been used to refer to nuclear power in the government work report since 2017. After that, a series of policy documents clarified the important position of nuclear power in “carbon neutrality”, especially in the two important documents of the action plan for carbon peak before 2030 and the modern energy system plan of the 14th five year plan, which once again emphasized the “active, safe and orderly development of nuclear power”. In the China nuclear energy development report (2020), it is given that the construction of nuclear power will continue to advance steadily according to the goal of 6-8 units per year. The strong support of the policy for nuclear power makes the goal gradually realized.
The newly approved 6 units have implemented the spirit of actively developing nuclear power
The development of nuclear power is gradually accelerating. After stepping out of the frozen period without new project approval from 2016 to 2018, the project approval has increased steadily from 2019 to 2021, including 5 units approved in 2019 (Shandong Rongcheng demonstration power station, Fujian Zhangzhou phase I and Guangdong taipingling phase I), 4 units approved in September 2020 (Hainan Changjiang phase II and Zhejiang Sanao phase I) Five units (Jiangsu Tianwan phase IV, Liaoning xudabao phase II and Hainan Changjiang xiaodui project) were approved in April 2021. The one-time approval of 6 units reached a new high in recent years, indicating that the spirit of actively developing nuclear power has been fully implemented.
Under the background of steady growth, the necessity of increasing nuclear power investment is highlighted
In 2022, steady growth and new infrastructure are the most important investment lines. The national Standing Committee stressed the need to “strengthen energy supply, plan ahead and promote the construction of energy projects with mature conditions and development needs”. With its huge pulling effect on investment, nuclear power has become an important starting point for promoting new infrastructure. The estimated investment of a single nuclear power unit is about 20 billion. The six units approved this time can drive the investment scale of 120 billion in the industrial chain. It plays an important role in both the investment driving effect and long-term energy supply. It is very necessary to increase investment in the field of nuclear power.
Green power attribute opens space for long-term development of nuclear power
In the process of accelerating the realization of the dual carbon goal, there have been problems such as abandoning wind and light, long-distance transmission and impact on the power grid caused by the increase of the proportion of new energy, as well as the power shortage caused by the decline of thermal power. Solving these problems requires long-term sustainable investment in UHV, energy storage, distribution network and other fields. Because nuclear power is the only power generation mode with the stability of traditional energy and the cleanness of new energy, it has become the best choice to solve the current energy problem. By 2021, China has 53 nuclear power operating units, with a total of 54.6gw. Nuclear power accounts for 5% of China’s total power generation, and is mainly distributed in southeast coastal provinces with high power load, which plays a great role in solving the current shortage of power supply.
Nuclear power is an important part of green power, which has formed a global consensus
In the context of intensified conflict between Russia and Ukraine, tight energy supply and high prices, Europe is improving its attitude towards nuclear power. On February 10, French President macron announced that France will build six new nuclear power plants from 2028 and start the feasibility study of another eight nuclear power plants, officially re embracing nuclear power. The EU also proposed to classify nuclear power as green energy in the draft law released in January. Facing the impact of traditional energy, countries all over the world have chosen wind power, photovoltaic and nuclear power. Nuclear power is the most suitable base load energy role in the transformation of energy structure to high proportion intermittent power supply. The formation of global consensus has laid the status and development space of nuclear power.
Investment advice
We believe that the approval of three new nuclear power projects and six units has accelerated the pace of nuclear power development, and the companies related to the nuclear power industry chain will benefit greatly. We mainly recommend the leading nuclear power operator China National Nuclear Power Co.Ltd(601985) , the leading manufacturer of nuclear power main equipment Dongfang Electric Corporation Limited(600875) , the leading manufacturer of nuclear power high-end castings Anhui Yingliu Electromechanical Co.Ltd(603308) , and the leading manufacturer of nuclear valves Jiangsu Shentong Valve Co.Ltd(002438) , Sufa Technology Industry Co.Ltd.Cnnc(000777) .
Risk tips
The construction progress of nuclear power project is less than expected, the policy uncertainty increases, and the upstream raw material supply has problems.
