South Korea is accelerating its push to export nuclear reactors to Europe as it seeks to become a leading player in a global market dominated by China and Russia.
After beating Westinghouse of the US and France’s EDF to become preferred bidder on a $17bn project in the Czech Republic in July, state-run utility Korea Hydro & Nuclear Power is set to sign a contract early next year for two reactors in the central European country.
The deal, if completed, will mark Korea’s first major overseas nuclear power project in 15 years, since a consortium led by KHNP parent Kepco won a $20bn contract in 2009 to build and operate four nuclear plants in the United Arab Emirates.
Whang Joo-ho, the president of KHNP, said the company was conducting a feasibility study for a nuclear power plant in the Netherlands and was in talks to build reactors in Finland and Sweden as it aims to export 10 more reactors globally by 2030.
Kepco has also held early-stage discussions with British officials about building a new station on the island of Anglesey off the coast of Wales.
The Czech deal has highlighted South Korea’s efforts at a time when projects run by western competitors including EDF remain mired in construction delays and cost overruns.
“Korea is the only country which has built [reactors] on time, on budget,” the country’s industry minister Ahn Duk-geun said after the Czech deal was announced.⁰
According to the World Nuclear Association, Korea’s construction cost for a nuclear power plant is estimated at $3,571 per kilowatt, much lower than $7,931 for France and $5,833 for the US.
Nuclear energy, which had been on the decline in Europe until the start of Russia’s full-scale invasion of Ukraine, has drawn fresh attention as more EU member states seek to secure energy supplies.
Interest in nuclear energy has also been revived by countries looking to develop low-carbon energy sources amid rising electricity demand. South Korean officials believe the country is in a strong position to win more deals in Europe, where the bloc’s ambitious climate goals have led to countries such as Italy and Belgium overturning their previous opposition to new nuclear reactors.
South Korea is the world’s fifth-largest producer of nuclear power, with its 26 reactors providing a third of the country’s electricity supply, according to the WNA. Soon after taking office in May 2022, conservative President Yoon Suk Yeol reversed the policy of his liberal predecessor Moon Jae-in of phasing out nuclear energy.
The Czech project follows KHNP’s agreement in 2022 to build a nuclear plant in Pątnów in central Poland, in a joint venture with Polish state-controlled energy company PGE. KHNP is also expected to bid for a Slovak power plant project announced in May.
The Pątnów project is still awaiting confirmation after Polish Prime Minister Donald Tusk decided to conduct a full review of the previous rightwing administration’s nuclear power strategy.
However, Adam Juszczak, an energy analyst at the state-funded Polish Economic Institute, said KHNP was making headway in central and eastern Europe because of low pricing and a strong recent record in meeting construction deadlines.
While the UAE project was the only use of the Korean group’s technology outside South Korea, according to the World Nuclear Association, it had provided comfort to potential customers according to analysts.
“It’s important that KHNP delivered four APR1400 reactors in Barakah in reasonable time,” Juszczak said, in pointing to the project that was started in 2012 and completed earlier this year.
For EDF, Europe’s biggest nuclear operator and constructor, the Korean company’s selection by the Czech government marks a setback.
The French group had hoped the argument of European sovereignty would boost its chances with the Czechs as part of a bid to build up a localised nuclear supply chain, according to people close to the group. But the deal was also a chance to prove that its European Pressurised Reactor designs, which use water as a coolant rather than the gas employed in most reactors in operation, could find clients outside France.
The company has been asked by the French government to build at least six new EPR 2 models in the coming years, but the design for an updated and simplified version of the reactor has not yet been finalised. Its only EPR reactor model built in France is about to be completed — but 12 years behind schedule.
EDF lost partly on price, a person close to the company said, but declined to comment further on the Czech decision. It has in the past insisted that it is in a position to build more reactors quickly.
Some critics said the decision was not a surprise. “It’s good news in some ways — EDF has neither the financial resources nor the human ones to do this,” a former French government official said.
There could be bumps along the way for the South Koreans, however. KHNP faces claims from Westinghouse that they used its proprietary technology for their APR1400 reactors.
A US district court last year dismissed Westinghouse’s lawsuit that argued that the Korean companies violated US export regulations requiring US government approval for technology sharing. However, the dispute remains unresolved as the court did not rule on the issue of intellectual property infringement.
Although Ahn, the South Korean industry minister, said earlier this month that the two companies were “in last-stage talks” to settle the disputes, the US company this week filed an appeal with the Czech anti-monopoly office in protest at the selection of KHNP as the preferred bidder.
“KHNP neither owns the underlying technology nor has the right to sub-licence it to a third party without Westinghouse consent,” the US company said.
KHNP this week said Westinghouse was just repeating its previous claims. It added: “We will properly deal with the legal disputes to ensure there will be no impact on the Czech project.”
The Czech trade and industry ministry, which also oversees energy policy, stressed that the tender had been reviewed by about 200 experts. “It is usual that unsuccessful bidders in contracts choose all ways to fight for their interests, and of course they have the right to do so,” the ministry said.
Suh Kyun-ryul, a nuclear expert and a former professor at Seoul National University, said KHNP would probably have to reach a financial settlement with Westinghouse. “This could even end up as a lossmaking deal,” he said.
Suh also noted that South Korea was constrained by a long-standing agreement with the US that was signed in the 1950s to restrict Seoul’s ability to develop a nuclear weapons programme. Under the agreement, South Korea’s access to raw material supplies is limited and it is not allowed to conduct uranium enrichment or the reprocessing of used fuel.
Long-term buyers were likely to ask for a one-stop service ranging from nuclear fuel supply to waste disposal, he said, adding the US agreement remained “South Korea’s Achilles heel”.
Nevertheless, Chris Gadomski, nuclear analyst, at BloombergNEF, said that while he was surprised the Czechs had opted for a new large reactor as opposed to the small-modular plants starting to be developed, he was not surprised that the Koreans had won the project.
“The Koreans have shifted the political perspective over the past few years from throttling back nuclear to accelerating nuclear development,” he said, adding: “For them to have a robust export portfolio in the future will enable them to reach economies of scale more efficiently and deliver products that are perhaps less expensive ultimately.”
Additional reporting by Rachel Millard in London
