Zhitong Financial APP learned that CITIC Securities released a research report saying that in the context of carbon neutrality, nuclear energy will become a key pole of the future energy structure. Controlled nuclear fusion, or the ultimate solution to mankind's energy problem, has accelerated its commercialization with technological breakthroughs and the influx of capital. Looking ahead, the bank believes that there will be more fusion experimental devices around the world to achieve net energy gain, and with the synergy of basic research and top-level design, Continental will also maintain its leading position in the field of controlled nuclear fusion for a long time. From an application perspective, the bank is optimistic that the fusion-fission hybrid reactor solution, as well as the continued development of AI and high-temperature superconductivity, may significantly accelerate the implementation of fusion technology in the short term. In the field of nuclear power, it is expected that the total investment scale of the domestic nuclear power industry will be close to 400 billion yuan in 2024, and the cumulative power generation of nuclear power is expected to account for 5.5%. On the technical side, the mainland's fourth-generation high-temperature gas-cooled reactor nuclear power technology has made major breakthroughs, the back-end spent fuel processing link will also be continuously improved, and the application of nuclear energy in new fields such as hydrogen production and industry will be accelerated, and nuclear power is expected to usher in rapid growth overseas.
In the field of controlled nuclear fusion, the bank recommends paying attention to the following two investment directions: 1) the extreme reaction environment puts forward extremely high requirements for the structural materials of fusion devices, and the mainland is at the international leading level in materials in related fields, and it is recommended to pay attention to ITER parts suppliers; 2) superconducting materials are an important part of realizing controllable nuclear fusion in the magnetic confinement route, and it is recommended to pay attention to nuclear fusion-related targets in the domestic superconducting materials industry.
Nuclear energy, as an important means for the mainland to achieve "carbon peak and carbon neutrality", currently accounts for only 5% of the power structure (National Agricultural and Energy Administration), far below the level of major nuclear power countries in the world. In recent years, with the acceleration of the approval of new unit projects, all production links in the nuclear energy industry chain are expected to enter an intensive delivery cycle, and the bank is optimistic about investment opportunities in the nuclear energy industry. At the same time, considering that the delivery cycle of nuclear power unit parts is 2-3 years, and core components such as valves are expected to enter the centralized delivery period from the end of 2023, releasing the performance elasticity of nuclear power parts enterprises, it is recommended to pay attention to the leading manufacturers of nuclear power parts that benefit from the trend of localization, including three core main lines: 1) nuclear power equipment and materials, 2) nuclear power engineering construction, the scale of the nuclear power construction market has maintained rapid growth in recent years, and 3) nuclear power technology and services.
The main views of CITIC Securities are as follows:
Prospect 1: Controllable nuclear fusion carries the ultimate dream of human energy utilization, top-level design and basic research progress is frequent, and the mainland will continue to be in the first echelon in the field of nuclear fusion.
According to the official website of the Southwest Institute of Physics of the Nuclear Industry, on December 29, 2023, the controllable nuclear fusion innovation consortium composed of 25 central enterprises, scientific research institutes, universities, etc. was officially announced. The establishment of the consortium is a major breakthrough in the field of controlled nuclear fusion, which will strongly promote the research and application of the mainland in the field of controlled nuclear fusion, and contribute to the adjustment and sustainable development of the energy structure of the mainland and the world.
Prospect 2: Controlled nuclear fusion will bring about a significant reduction in energy costs, which is of great strategic significance and will gradually become a highland for global industrial development.
According to The Paper, in August 2023, the NIF laboratory in the United States produced a higher nuclear fusion energy output than in December 2022. In the same month, the mainland's new-generation artificial solar "Gyro-3" achieved high-confinement mode operation under 1 million amperes for the first time in trial operation, once again setting a new operating record for the mainland's magnetic confinement fusion device. According to the FIA, as of July 2023, global fusion companies have raised more than $6.2 billion, an increase of about $1.4 billion or 27% year-on-year from $4.8 billion in 2022. In May 2023, Helion Energy, a private U.S. company, signed the "first order" with Microsoft for commercial nuclear fusion power generation, and its largest investor is OpenAI CEO Sam Altman. In November, Lianchuang Optoelectronics signed a comprehensive strategic cooperation framework agreement with China Nuclear Fusion (Chengdu) Design and Research Institute, and the total investment of the project is expected to exceed 20 billion yuan.
Prospect 3: Fusion-fission hybrid reactors can amplify energy through hybrid cladding, which has multiple advantages over pure fusion reactors.
The bank expects to complete the physical optimization and engineering design of the core in 2025, complete the construction of the first phase of the main engine and auxiliary systems and carry out deuterium-tritium tests in 2030, and may complete the demonstration reactor of more than 100MW in 2035. At the practical level, hybrid reactors reduce the requirements for high-energy plasma for pure fusion cores, which in turn reduces the requirements for plasma control, tritium self-sustaining, and irradiation-resistant structural materials. At the same time, higher energy conversion efficiency can have lower construction costs and shorter construction periods under the same electrical power, and the mainland's nuclear research institutions have carried out relevant work on hybrid reactors, which may greatly accelerate the practical application of fusion technology in the short term.
Outlook 4: The global superconducting product market has reached 6.8 billion euros, and with the continuous development of the controlled nuclear fusion industry, it is expected to bring opportunities for the sustainable development of high-temperature superconducting materials.
For the current magnetic confinement route of the mainstream of controllable nuclear fusion, the formation of a strong magnetic field is the prerequisite for achieving controllable reactions, and superconducting materials are an indispensable part of achieving this goal. According to Conectus data, the global market size of superconducting products was 5.19 billion euros in 2012 and 6.46 billion euros in 2020, and it is estimated that the figure will reach 6.8 billion euros in 2022, with a CAGR of 2.7% from 2012 to 2022. The accelerated commercialization of controlled nuclear fusion will bring new investment opportunities to related materials.
Outlook 5: "Hualong No. 1" is gradually maturing, the nuclear power industry has been strongly driven by technology and policy, the industrial development has been significantly accelerated, and the rhythm of high approved nuclear power in the mainland is expected to be maintained.
It is expected that in 2024, the mainland nuclear power units are expected to maintain a high approval capacity of 8~10 units, and the scale of the mainland nuclear power market will continue to grow high in the future, driven by the rise in volume and price.
Outlook 6: With the completion and commercial operation of pre-approved nuclear power unit projects, the proportion of installed nuclear energy capacity and nuclear power generation in mainland China is expected to continue to increase.
According to the China Nuclear Energy Industry Association, in 2022, the country's operating nuclear power assembly capacity was 56.98 million kilowatts, accounting for 2.2% of the country's total installed power capacity, and the power generation capacity was 417.78 billion kilowatt hours, accounting for about 4.7% of the country's total power generation, and nuclear power generation reached the second place in the world. The bank expects that the assembly capacity of nuclear power generators in operation in China will reach 85 million to 90 million kilowatts by 2025, and the cumulative power generation of nuclear power in mainland China will account for 5.5-6% of the country's cumulative power generation.
Outlook 7: The mainland has made a major breakthrough in the fourth-generation high-temperature gas-cooled reactor nuclear power technology, and the bank expects that the domestic high-temperature gas-cooled reactor reserve project is expected to start construction in 2024.
According to the official website of the Ministry of Commerce, China has signed memorandums of understanding with Saudi Arabia, the United Arab Emirates and other countries and regions on cooperation in high-temperature gas-cooled reactor projects, and the bank believes that the export of domestic high-temperature gas-cooled reactors is just around the corner, and the project is expected to be implemented as soon as 2024.
Outlook 8: The investment in the back-end spent fuel processing link of the mainland nuclear industry is expected to meet rapid growth.
The bank expects that in 2024, the mainland's laws and regulations on the off-reactor storage of spent fuel will be further improved, and the gap in the mainland's spent fuel processing capacity will reach 2400-3000 tons in 2035, and 3-4 large spent fuel plants need to be built accordingly, and the average annual investment in spent fuel processing in the mainland is expected to be 450-60 billion yuan in the next ten years.
Outlook 9: With the iteration of reactor technology and the reduction of costs and efficiency improvements, the bank expects that the application of nuclear energy in new fields such as hydrogen production and industrial applications is expected to accelerate.
It is estimated that the scale of comprehensive utilization of nuclear energy will reach 100 million kilowatts in 2035, which is one-half of the scale of nuclear power generation, and the scale of comprehensive utilization of nuclear energy will exceed the scale of nuclear power generation in 2050.
Outlook 10: The bank expects China's nuclear power export output to reach 90 billion to 120 billion yuan by 2025.
The technological breakthrough of "Hualong No. 1" means that the mainland has truly achieved independent and controllable nuclear power technology in the mainstream third-generation nuclear power technology, and has stronger competitiveness in products, projects and technologies going to sea, while the "Belt and Road" strategy outlines the "road map" of the mainland's nuclear power to the sea.
Risk factors:
There are risks such as the progress of controlled nuclear fusion research is less than expected, the commercialization of controlled nuclear fusion is less than expected, the progress of international ITER projects is less than expected, the promotion of relevant policies is less than expected, the follow-up investment of commercial capital is less than expected, the approval of nuclear energy projects is less than expected, the delivery cycle is delayed, the industry collection funds are less than expected, the technology development is less than expected, and the promotion of nuclear energy in other comprehensive utilization fields is not as expected.
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