China should keep its installed nuclear power capacity below 70 gigawatts by 2020 to avoid shortages in equipment, fuel and skilled workers, the research unit of the State Council wrote in an article published in state-controlled Outlook magazine.

The nation should also adopt third-generation AP1000 technology for all new plants instead of advanced second-generation technology, as second-generation designs lack sufficient safety measures to prevent serious accidents, it said.

China plans to build dozens more nuclear power plants over the decade as part of a strategy to derive 15% of its energy mix from cleaner-burning non-fossil fuels by 2020.

Some local governments have been lobbying the central government to build new nuclear projects in their respective regions to boost economic growth, and as equipment using AP1000 technology can only start mass-production in 2011, they are adopting the second-generation technology, it said.

"If the current trend continues by building too many new plants too quickly, it could endanger the long-term health of the nuclear power sector," it said.

China signed a final agreement with Westinghouse Electric Co. in July 2007 to buy AP1000 reactors that included the transfer of AP1000 technology to China .

AP1000 reactors are expected to account for 37% of annual reactor installation in 2015 from zero this year, and Shanghai Electric Group Co.(2727.HK) will likely be the biggest winner among equipment makers from the adoption of the AP1000 technology, since it is a key partner in localization of the technology, Daiwa Capital Markets analysts said in a recent research note.

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