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Thursday, July 10, 2008
G8 SUMMIT 2008
Nuke plant makers cast eye abroad
With global warming in the spotlight, greenhouse gas emitters turn to atomic power
The voice of Atsutoshi Nishida, president of Toshiba Corp., rose an octave as he talked about the electronic giant's quest to build atomic power plants.
"Our plan calls for us to either sign or start constructing 33 nuclear power plants by 2015," Nishida said in May. "The figures are conservative, however."
Atomic plant construction has become a key strategy at Toshiba, which purchased U.S. reactor builder Westinghouse Electric Co. in 2006 for $5.4 billion.
"In 2030, Toshiba and Westinghouse will aim for ¥1 trillion in sales," Nishida said.
As global warming gains the political spotlight worldwide, including at the Group of Eight summit in Hokkaido, major greenhouse gas emitters are looking at nuclear power as an effective way to cut pollution.
If the global community wants to halve greenhouse gas emissions by 2050, 32 nuclear reactors will have to be built every year and nations will need to make greater use of wind and solar power, according to the Paris-based International Energy Agency.
As of January, there were 435 nuclear reactors operating worldwide and 96 either under construction or in the planning stage, according to the nonprofit organization Japan Atomic Industrial Forum.
There are three worldwide alliances of nuclear plant builders all scrambling to boost their share in an ever-expanding market, and Japanese companies have joined all three.
"In the worldwide nuclear plant market, Japanese companies are not well-known," said Tomoko Murakami, head of the atomic energy group at the Institute of Energy Economics, Japan.
That is why they are joining with the big nuclear plant builders to expand overseas, as in the case of Toshiba and Westinghouse, she said.
Hitachi Ltd. and General Electric Co. merged their reactor divisions last year and Mitsubishi Heavy Industries Ltd. agreed in 2006 to cooperate with France's Areva SA, the world's largest nuclear plant maker, to jointly develop reactors.
"GE creates the plant design and Hitachi supplies plant parts," Murakami said. "It seems to be working."
The Toshiba-Westinghouse alliance holds about a third of the global atomic plant market, while the Hitachi-GE group has about 25 percent and Mitsubishi Heavy-Areva roughly 15 percent, she said.
Although Mitsubishi Heavy is partnered with Areva, they remain rivals in many fields. This leaves the Japanese company, known for its pressurized water reactor technology, to be basically on its own when it expands overseas.
Mitsubishi Heavy, which lost out to Toshiba in a bidding war for Westinghouse, plans to invest about ¥50 billion in the reactor business between business 2008 and 2010.
"We aim to sign two contracts a year. This will increase (our) global share to up to 25 percent" by 2030, Akira Sawa, general manager of Mitsubishi Heavy's nuclear energy system division, said in May.
The Hitachi-GE group, known for its boiling water reactors, hopes to get orders for a third of future U.S. atomic plants.
The fortunes of Toshiba, Hitachi and Mitsubishi Heavy are closely linked to Japan's 55 reactors and the nation's reliance on atomic power in line with an energy security policy initiated after the oil crises of the 1970s.
This linkage has helped nurture their reactor technology and allowed them to gain a foothold in the global market, observers say.
However, Tomohiko Kita, who heads JAIF's information and communications division, said the trend would have been unpredictable a decade ago.
"For a long time, nuclear power was believed to be in a downtrend," Kita said, adding that the business went through a "winter" in the 1990s when there were few new projects.
"But due to rising oil prices, the need for energy security and the need to curb carbon dioxide emissions, nuclear power started to gain more attention starting around 2003," he said.
No nuclear plants have been built in the U.S. for the past three decades, due in no small part to the fear generated by the partial core meltdown at Three Mile Island in Pennsylvania on March 28, 1979.
But U.S. policy took a significant turn when George W. Bush became president and announced in 2001 that the federal government would push nuclear power as a key energy source.
In April, Southern Co., the biggest U.S. power producer, contracted for two reactors in Georgia with Westinghouse and other companies looking to build the first nuclear plant in the U.S. in 30 years.
The market is not limited to the U.S. and other rich countries in Europe.
Atomic power demand is rising rapidly in emerging nations, including China and India. According to JAIF, 16 plants are planned or under construction in China and 14 in India.
But whether the Japanese companies can increase their presence in the U.S. and Europe as well as emerging nations remains to be seen.
Government-level diplomacy is usually effective to promote reactor sales if they are national projects.
When French President Nicolas Sarkozy visited China last November, he reportedly signed an 8 billion euro Areva nuclear plant deal with his Beijing counterpart, Hu Jintao.
Murakami of the Institute of Energy Economics, Japan acknowledges that politics, brand name and marketing power are keys to increasing global share.
But in the end it all boils down to whether the companies can continue to develop high-quality technology in building plants, she said.
"Japanese companies have supplied key components for the U.S., Europe, China and other nations," she said, and developing high-quality technology will be the key to survival.