South Korea’s state-owned electricity supplier is toying with the option of joining a nuclear plant project in the UK, weighing the pros of expanding its global account and the cons of entering the shaky venture.
Last month, the head of Korea Electric Power Corp. had expressed his interest in joining the nuclear plant project in the UK, confirming market speculation that Kepco might purchase Toshiba’s stake in the project. At that time, Toshiba was holding a 60 percent stake in the joint venture project called NuGen.
But the Japanese company now holds a 100 percent stake in the NuGen project, as its partner, French utility firm Engie, pulled out of the project earlier this week by selling its 40 percent stake to Toshiba for 15.3 billion yen ($138.5 million).
The troubled Japanese company announced Tuesday that Engie was exercising its right to sell its shares because NuGen was facing significant challenges after Toshiba’s US unit Westinghouse Electric Corp., which is supposed to design the plant’s reactor, filed for bankruptcy protection from creditors last week.
On the same day Engie’s pullout was announced, Kepco CEO Cho Hwan-Eik met Greg Clark, secretary of the UK Department for Business, Energy & Industrial Strategy in Seoul.
The utility firm declined to comment on the meeting or whether it would still consider buying all of Toshiba’s stake but the following day, Clark told reporters that a consortium in charge of building the nuclear plant would discuss a potential partnership with Kepco.
Media reports suggest that as the NuGen project faces uncertainty, the British government is stepping in to save the project, which is set to provide 7 percent of the UK’s electricity and replace nuclear reactors that are coming to the end of their life cycles.
The NuGen joint venture was formed in 2010 between ENGIE (formerly GDF Suez prior to April 2015), Spain’s Iberdrola and Scottish and Southern Energy to build a new nuclear power station of up to 3.6 gigawatt capacity at Moorside in Cumbria. SSE and Iberdrola withdrew from the project in 2011 and 2013, respectively.
Toshiba’s Westinghouse crisis might be an opportunity for Kepco, according to analysts here.
“As many nuclear developers are facing challenges, Kepco has a potential to emerge as a competitive player,” Kang Dong-jin, an analyst at HMC Investment Securities said.
Kepco has been trying to emerge as a big player in the nuclear industry and seeking a new overseas nuclear power plant project eight years after it secured a contract to build four nuclear plants in the United Arab Emirates.
“It poses a huge risk for Kepco to use AP1000 for which many issues have been raised, and I think Kepco will try to replace AP1000 with its own APR1400 reactor,” Kang added.
Toshiba said in a statement this week that Westinghouse’s bankruptcy protection filings “have made planned supply of the AP1000 (nuclear power plant) for the UK project uncertain, and we have therefore recorded an impairment loss covering the cost of the NuGen project.”
However, some advised caution.
“Even if Kepco gets involved with the project, there are some challenges, including how to fund the $12-18 billion nuclear plant project,” an industry source said.
“And it is not clear whether the UK government is willing to financially support the billion-dollar project and whether it is possible to switch the nuclear reactor to Kepco‘s.“
Switching to a new reactor design at Moorside would require the project to go through another time-consuming approval process from the UK’s nuclear regulators, which could take four or five years to complete, according to a report by the British daily the Telegraph on March 29.
By Park Ga-young (firstname.lastname@example.org)