Second U.S.-bound investment, eight reactors... last-minute wrangling over the Westinghouse stake - 경향신문

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Unit 2 of the Barakah nuclear power plant in the UAE. Provided by Korea Electric Power

The plan to build eight nuclear reactors, which the government reported to the National Assembly as the second U.S.-bound investment, has seen the two countries agree on the construction scale and the allocation of reactor models, but they have reportedly not narrowed differences over the size of the stake to be acquired in U.S. nuclear company Westinghouse.

Industry and Trade Minister Kim Jeong-gwan on the 22nd briefed the National Assembly Committee on Trade, Industry, Energy, SMEs, and Startups on the Korea-U.S. Nuclear Power Framework, which centers on Korea Electric Power, Korea Hydro and Nuclear Power, and others building eight reactors with Westinghouse using 120 billion dollars out of a total investment of 200 billion dollars. The reactor lineup is expected to comprise six Westinghouse AP1000 units and two Korean APR1400 units. Seoul agreed to respond to a proposal to acquire a stake in Westinghouse in the United States, but the size of the acquisition has reportedly not been finalized.

The government is pinning hopes on the APR1400, a Korean reactor design, entering the United States and on participation by Korean companies in the supply chain, but many aspects still require careful scrutiny for commercial rationality.

The issue of acquiring a Westinghouse stake is the most acute. In January last year, Korea Hydro and Nuclear Power and Korea Electric Power ended an intellectual property dispute with Westinghouse by agreeing to pay for 50 years more than 1 trillion won in consideration, including a 175 million dollar technology license fee per exported reactor and 650 million dollars in goods and services, and by agreeing not to enter major markets in North America and Europe. If only a minority stake is purchased this time without securing substantive voting rights, the result could be spending investment funds without lifting those conditions. Real benefits arise only if voting rights are actually secured.

At the National Assembly briefing that day, Minister Kim was said to be negotiating with the goal of securing a 5 to 10 percent stake in Westinghouse, adding that voting rights could be obtained even at a 5 to 10 percent share.

Cost overruns are another persistent risk in nuclear projects. At the Barakah nuclear power plant in the UAE, cost overruns reached 4.4 billion dollars, and within Team Korea the dispute over an additional 1 billion dollars claimed by Korea Hydro and Nuclear Power against Korea Electric Power went as far as international arbitration. It has not been disclosed how Korea and the United States would divide any cost overruns on the U.S. investment reactors.

Allocation of liability in the event of an accident is also an issue. In the United States, operators bear responsibility for nuclear accidents, while Japan, which has finalized investment in small modular reactors (SMRs), asked for a written assurance that financial institutions would not be held liable; having received only an oral assurance, it is delaying the disbursement of funds.

Despite such risks, the government appears to have reported the nuclear framework alongside the investment because, taken together, U.S. market entry for Korean reactors, supply of Korean-made equipment, and participation in construction leave sufficient net benefits overall. Given the lengthy construction timelines, the government is also said to be discussing with the United States a plan to commit some funds in advance to place early orders for long-lead components.