Keep the commercial nuclear policy intact

Korea must run the gauntlet until it seals a formal contract in March next year.

Chung Bum-jin The author is a professor of nuclear engineering at Kyung Hee University.

On July 17, Korea Hydro & Nuclear Power (KHNP) was declared as the preferred bidder to build a minimum of two nuclear reactors in Dukovany, Czech Republic. The feat, marking Korea’s first multibillion-dollar reactor order since 2009, came after an eight-year-long endeavor. A week before the formal selection announcement, Korea scored far above its French rival EDF across technological and economic categories. Still, Korea bit its nails as France had the diplomatic and proximity advantage as a European Union peer.

Korea must run the gauntlet until it seals a formal contract in March next year. The project is equally close to the heart for the Czechs. The new reactors meant to complement the aged facilities must be completed on time to sustain the country's power supply. Some suspect Korea had offered to take up the project below the cost to win the deal. The concerns may have justification, but they should not override Korea’s feat.

The two additions to the Dukovany nuclear complex would each cost 200 billion Czech crowns ($8.6 billion). Just because Korea pledged to deliver the units at prices lower than what France had offered, it should not be accused of dumping. EDF’s completion of next-generation Olkiluoto reactors in Finland has been 13 years behind schedule, and its delivery of new nuclear plant in Flamanville delayed for more than a decade. Costs snowball if construction falls behind schedule. Korea met its contract terms for completion as well as the budget for the nuclear plants it built in the United Arab Emirates.

The project led by state-run KHNP has been made by Team Korea, but private members in the consortium are free to exit if they were not pleased with the terms. Doosan Enerbility and Daewoo Engineering & Construction as well as Korea Electric Power Corp. (Kepco) units presented the cost of their share. Instead of a top-down approach of the government or the state nuclear agency setting the aggregate cost, the bid price was decided after factoring in the estimated costs penciled by each member of the consortium. The consortium members would not have stayed on if they had to suffer.

A lawsuit with Westinghouse over intellectual property rights is also a concern. Although it is hard to predict the outcome of a legal case, the dispute with the former U.S. partner should upset the deal. Kepco entered a technology transfer contract with Westinghouse in 1997 and a license contract in 2007, enabling the state utility company to sell the licensed-out nuclear technology to countries other than the United States. Sales to the United States are also possible through a separate negotiation. The U.S. company has a weak point on its claim against Kepco and KHNP. A U.S. District Court dismissed Westinghouse’s claims against Kepco and its nuclear unit as the charge had been made under a nuclear security context rather than intellectual property rights.

The latest achievement is significant as the award comes from the Czech Republic with a long history of nuclear reactor operation. The Czech Republic has been running nuclear reactors longer than Korea based on its own gas pressurized technology. The accreditation by a reactor-literate state can influence other European countries mulling over reactor expansion for energy sourcing in place of fossil fuel and raises Korea’s prospects for additional Czech procurements for replacements in the Temelin complex as well as projects in the Netherlands, Slovenia, Finland, Sweden, Poland, Saudi Arabia, and the UAE.

The contract is a major relief after a long drought in the reactor business. However, it is not enough to fully restore the reactor ecosystem devastated by the former government’s abrupt decision to wean off nuclear energy. Many small and midsized companies in the industry have shuttered or changed business during the phaseout process. Machineries that used to build reactors were disposed in a fire sale. They cannot easily jump back in the game even if the government announces new constructions. The10th five-year electricity outline merely mentioned units that are under construction and did not add new plans. The 11th outline announced last month visualized just three new units over the next 15 years. It is unclear whether the conservative government is genuine in reinforcing the reactor infrastructure at home.

The reactor industry has been restored to just 10 percent of the pre-phase-out status. Companies won’t be expanding facilities just to meet the exports of two units. The ecosystem cannot fully normalize unless a long-term supply flow is guaranteed. Most of all, there must be a confidence that the commercial nuclear policy will stay intact regardless of who takes power.

Translation by the Korea JoongAng Daily staff.