South Korea is accelerating its push to export nuclear reactors to Europe as it seeks to assume a leading position in a global market dominated by China and Russia.
State-run power company Korea Hydro & Nuclear Power beat out America's Westinghouse and France's EDF as the preferred bidder for the $17 billion project in the Czech Republic in July and is set to sign a contract to build two reactors in the central European country early next year.
If the deal goes through, it will be South Korea's first large-scale overseas nuclear power project in 15 years, since a consortium led by Korea Electric Power Corporation, the parent company of Korea Hydro Electric Power Co., won a $20 billion contract in 2009 to build and operate four nuclear power plants in the United Arab Emirates.
KHNP President Wang Ju-ho said the company is conducting a feasibility study for a nuclear power plant in the Netherlands, aims to export 10 more reactors globally by 2030, and is in talks to build reactors in Finland and Sweden.
Kepco is also in early stage discussions with UK authorities about building a new power station on the island of Anglesey, off the coast of Wales.
The Czech deal highlights South Korea's efforts at a time when projects led by Western competitors, including EDF, remain plagued by construction delays and cost overruns.
South Korea is the world's fifth-largest nuclear power producer, with 26 reactors providing a third of the country's electricity supply. © Korea Hydro and Nuclear Power Co. via Getty Images
“South Korea is the only country that built (a nuclear reactor) on schedule and within budget,” South Korea's Industry Minister Ahn Deok-geun said after the deal with the Czechs was announced.
According to the World Nuclear Association, the cost of building a nuclear power plant in South Korea is estimated at $3,571 per kilowatt, significantly lower than France's $7,931 and the United States' $5,833.
Nuclear energy, which had been in decline in Europe until Russia's full-scale invasion of Ukraine, is receiving renewed attention as more EU member states seek to secure their energy supplies.
Rising electricity demand is also rekindling interest in nuclear energy among countries looking to develop low-carbon energy sources. South Korean officials believe they are in a better position to win more contracts in Europe, where ambitious climate goals from the European Union have led countries such as Italy and Belgium to reverse their opposition to building new nuclear reactors.
South Korea is the world's fifth-largest nuclear power producer, with 26 reactors providing a third of the country's electricity supply, according to the WNA. Conservative President Yoon Seok-yeo reversed his liberal predecessor Moon Jae-in's policy to phase out nuclear energy shortly after taking office in May 2022.
Korea Hydro and Nuclear Power's Hwang Ju-ho aims to export more than 10 nuclear reactors to the world by 2030 © Woohae Cho/Bloomberg
The Czech project follows KHNP's agreement to build a nuclear power plant in Pontonu, central Poland, in a joint venture with Polish state energy company PGE in 2022. KHNP will also bid for a power plant project in Slovakia announced in May.
The Patnov plan is still awaiting approval after Polish Prime Minister Donald Tusk decided to overhaul the nuclear strategy of the previous right-wing government.
But Adam Juszczak, an energy analyst at the state-run Polish Institute of Economics, said KHNP was making headway in Central and Eastern Europe thanks to low prices and a recent good record of meeting construction deadlines.
The UAE project is the only time the group's technology has been used outside South Korea, according to the World Nuclear Association, but analysts say it has reassured potential customers.
“It is significant that KHNP delivered the four APR1400 reactors to Barakah in a timely manner,” Juszczak said, pointing to the project that began in 2012 and was completed earlier this year.
Wolsong Nuclear Power Plant, Gyeongju, South Korea © Jeon Heon-Kyun/EPA
For EDF, Europe's largest nuclear power plant operator and builder, the Czech government's selection of the South Korean company represents a setback.
The French group had hoped that asserting European sovereignty would boost its chances of a deal with the Czech Republic, part of an effort to build a localized nuclear supply chain, according to a person close to the group. But the deal was also an opportunity to prove that its European Pressurized Water Reactor design, which uses water as a coolant rather than gas as used in most operating reactors, could win customers outside France.
The company has been asked by the French government to build at least six new EPR2 reactors over the next few years, but the designs for the improved and simplified versions of the reactors have yet to be finalized. The only EPR reactor built in France is nearing completion, but is 12 years behind schedule.
A person close to EDF said the company had suffered some losses on prices but declined to comment further on the Czech decision. The company has previously maintained it is in a position to build more reactors quickly.
Some critics said the decision was not surprising. “In a way, it's good news. EDF doesn't have the financial or manpower to do this,” said a former French government official.
But South Korea could face a bump in the road, as KHNP faces allegations from Westinghouse Nuclear Power that the company used proprietary technology in its APR1400 reactors.
A federal district court last year dismissed a lawsuit filed by Westinghouse alleging that the South Korean company violated U.S. export controls that required U.S. government approval for technology sharing, but the court did not rule on the issue of intellectual property infringement, leaving the dispute unresolved.
According to the World Nuclear Association, the cost of building a nuclear power plant in South Korea is estimated at $3,571 per kilowatt, far lower than France's $7,931 and the U.S.'s $5,833. © Jean Chung/Bloomberg
South Korea's Industry Minister Ahn said earlier this month that the two companies were “in final-stage discussions” to resolve the dispute, but the U.S. company appealed to the Czech Antimonopoly Office this week, protesting that KHNP was chosen as the preferred negotiating partner.
“KHNP does not own the underlying technology, nor does it have the right to sublicense it to third parties without Westinghouse's consent,” the U.S. company said.
KHNP said this week that Westinghouse was simply repeating its previous claims, adding that it would “deal with the legal dispute appropriately so that the Czech project is not affected.”
The Czech Ministry of Industry and Trade, which also oversees energy policy, stressed that the bids were reviewed by around 200 experts. “It is common for unsuccessful bidders in contracts to take all possible measures to advance their own interests and, of course, they have the right to do so,” the ministry said.
Seo Gyun-yeol, a nuclear expert and former professor at Seoul National University, said KHNP would probably have to reach a financial settlement with Westinghouse, adding that “it could end up being a loss-making deal.”
Seo also noted that South Korea is constrained by longstanding agreements made with the United States in the 1950s that limit its ability to develop nuclear weapons. The agreements limit South Korea's access to raw material supplies and do not allow it to enrich uranium or reprocess spent fuel.
He said long-term buyers would likely want one-stop services from nuclear fuel supply to waste disposal, adding that the agreement with the United States remains “South Korea's Achilles heel.”
However, BloombergNEF nuclear analyst Chris Gadomski said he was surprised the Czechs chose the new large reactor over the smaller modular reactors that have begun development, but not surprised South Korea won the project.
“South Korea has shifted its political perspective in recent years from curbing its nuclear development to accelerating it,” he said, adding that “having a strong export portfolio in the future will enable it to achieve economies of scale more efficiently and ultimately perhaps supply cheaper products.”
Additional reporting by Rachel Millard in London
