The visit of the British Minister of Industry and Energy, Kwasi Kwarteng, is interpreted as a stepping stone to strengthen the UK’s energy security and independence. In order to minimize the global ‘energy shock’, a nuclear power plant expansion card was drawn out, but it seems that the calculation was laid to lower the dependence on France, which monopolizes the UK nuclear power plant market. Considering the fact that China and Russia were virtually excluded due to the intensifying competition for hegemony between the US and China and the prolonged war in Ukraine, it is clear that South Korea was focused on as an alternative to France. Following the Czech Republic and Poland, the UK is also showing great interest, and it is expected that the Korean nuclear power plant’s entry into Europe will gain momentum.
In addition, if the UK nuclear power plant export is successful, it is expected to recover the image of a nuclear power power, which has been weakened by the nuclear phase-out policy over the past five years, including building a track record of exporting nuclear power plants to advanced countries.
According to the government and energy industry on the 6th, EDF, a French nuclear power plant, is currently operating most of the nuclear power plants in the UK. EDF is also in charge of three of the eight nuclear power plants that British Prime Minister Boris Johnson announced in April to build. In order of degree of progress, △Hinckley Point C (southern England) △Sizewell C (east) △Bradwell B (southeast), etc. EDF is conducting these three projects jointly with its partner, China Nuclear War Group (CGN).
From the British government’s point of view, to strengthen energy security and independence, it is necessary to diversify the operators of the nuclear power plant market, which is monopolized by EDF. It is reported that Minister Kwarteng is planning to visit Japan after South Korea. There are also large nuclear power plant companies such as Mitsubishi, Hitachi, and Toshiba in Japan, and it is expected that they will discuss ways to cooperate with them.
It is interpreted that Minister Kwarteng visited Korea because he paid attention to the reliability and economic feasibility of Korea’s nuclear power plants that had been built up over the past decades. In particular, the British government said that Korea has completed the most recent successful completion of the Baraka nuclear power plant in the United Arab Emirates (UAE), and above all, it is the only country in the world that has the ability to build a nuclear power plant in time and within a set budget. is said to have been highly appreciated.
This strength is recognized not only in the UK, but also in the Czech Republic and Poland. At the first press conference since taking office on the 5th, Minister of Trade, Industry and Energy Lee Chang-yang said, “Overseas, Korea’s nuclear power plant construction capabilities, maintenance and repair, and operation capabilities are highly evaluated.” are likely to be exported,” he said.
There are voices in the domestic nuclear power plant industry that the business feasibility of the UK nuclear power plant market should be thoroughly reviewed. In the case of the UK nuclear power plant, in terms of business structure and contract terms, it is analyzed that the project risk (risk) may be greater than that of the UAE Baraka nuclear power plant, which was previously completed by KEPCO, as well as the Czech and Polish nuclear power plants promoted by Korea Hydro & Nuclear Power.
In the meantime, the British government has set a profit in advance for operators when placing orders for nuclear power plants. For example, if a nuclear power plant is completed and produces electricity, 90 pounds per megawatt-hour (MWh) is paid. From the perspective of a business operator, it has the advantage of being able to estimate the expected sales before the start of construction.
However, the UK government recently decided to introduce a ‘regulated asset-based (RAB)’ method for new nuclear power plant projects. When the RAB method is applied, the price is determined in the market every time electricity is produced after completion without setting a profit in advance. The plan is to compensate only for accidental risks that occur during construction without being involved in profits. As such, operators are exposed to uncertainty.
For this reason, KEPCO is demanding more specific contract terms from the British government, but it is reported that the UK side is showing a position of ‘contract first, discuss later’. Industry insiders and outsiders are also raising the observation that the Yun Seok-yeol administration may fall into a dilemma over participation in the UK nuclear power plant project because the government has set the export of 10 nuclear power plants by 2030 as a national task. An industry insider who requested anonymity said, “Unlike countries where Korea has exported or promoted nuclear power plants, the business feasibility of the UK tends to be low.”
Nevertheless, there are voices calling for a positive review of participation in the UK nuclear power plant market. This means that even if profitability declines, you must first participate in the market to see additional order opportunities. There is an argument that China’s CGN is likely to be excluded from the UK nuclear power plant market, so it is necessary to consider a strategy to occupy the vacant position.
Earlier, the British government officially announced the withdrawal of Chinese companies such as Huawei from the 5G mobile communication market. For this reason, the EDF recently publicly urged the UK government to decide whether or not to withdraw Chinese CGN, which participated in the construction of a new nuclear power plant, as soon as possible. The British government has yet to comment on this. If a Chinese company decides to leave the UK nuclear power plant market, CGN’s stake in the new nuclear power plant must be sold.
Countries that are currently promoting nuclear power plant construction include the UK, Czech Republic, Poland, Egypt, and Saudi Arabia. Korea is preparing to bid for nuclear power plants in the Czech Republic and Saudi Arabia, and has submitted a business proposal for nuclear power plants in Poland. In the case of the Egyptian nuclear power plant, final conditions are being discussed.
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