U.S. Nuclear Plants Cost Three Times as Much as Shin-Hanul; Economic Viability Hinges on Korean Companies' Participation

[Financial News] Doubts are emerging over the "commercial rationality" of a $120 billion project to build eight nuclear power plants in the United States, which the government has said it is considering as its second investment project in the U.S. The project is larger than nuclear power projects at home and abroad, but its economic viability could vary depending on whether Korean companies handle the entire engineering, procurement and construction (EPC) process.
According to People Power Party lawmaker Gu Ja-geun, the opposition's secretary on the Trade, Industry, Energy, SMEs and Startups Committee, the U.S. nuclear project involves a per-unit investment, based on the reported total project cost, roughly three times that of the domestic Shin-Hanul Nuclear Power Plant. Shin-Hanul Units 3 and 4 have a total project cost of 12 trillion won, or 6 trillion won per unit, while the U.S. plants are estimated to cost 20 trillion won per unit.
This is also far larger than recent nuclear export projects. The two-unit Dukovany Nuclear Power Plant project in the Czech Republic, the latest such case, is valued at 26 trillion won. Like Shin-Hanul Units 3 and 4, it uses two Korean-designed APR-1400 reactors, with design, procurement, construction, commissioning and nuclear fuel all supplied.
The economic viability of the U.S. nuclear project will also depend on whether Korean companies take full responsibility as "Team Korea." The extent to which they acquire a stake in Westinghouse Electric Company, as well as how intellectual property rights are settled in connection with that issue, are also variables. Of the eight plants, six are reportedly based on Westinghouse Electric Company's AP1000 and two on APR-1400.
The economic viability could differ substantially depending on whether the $120 billion proposed by the U.S. side represents the full EPC construction cost for the eight nuclear plants or a comprehensive investment limit that includes Korea's equity investment and financial support, among other things, Gu said.
An industry official also said, "Nuclear EPC contracts cover a broad scope, so their size varies depending on the details. If companies take on only part of the broad areas of design, procurement and construction, the scale inevitably becomes much smaller."
However, in the case of primary equipment such as reactors, Doosan Enerbility has an exclusive position, meaning the Korean side is structurally assured of a substantial share. As the country's only manufacturer of primary nuclear equipment, the company has supplied not only APR-1400 but also reactors and steam generators for Westinghouse Electric Company's AP1000. It previously signed a 5.6 trillion-won supply contract for the Dukovany Nuclear Power Plant and a 4.3 trillion-won supply contract for the Barakah Nuclear Power Plant, a 20 trillion-won project.
For this reason, the government is said to have checked whether Doosan Enerbility had sufficient supply capacity when discussing the U.S. nuclear investment plan. Doosan Enerbility said that supplying the primary equipment should be feasible, given that construction of the eight nuclear plants would necessarily be carried out over an extended period.
[email protected] Kim Yun-ho Reporter