Energy Ministry to pay cost of reactor closure

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Energy Ministry to pay cost of reactor closure

Korea’s Energy Ministry said Thursday it will compensate the state nuclear operator for financial losses incurred due to the early closure of an old reactor and the cancellation of construction plans.

The Korea Hydro & Nuclear Power (KHNP) last week decided to shutter the Wolsong 1 reactor before the end of its operational life cycle and nullify plans to build four new reactors as part of the government’s nuclear phase-out policy. The Ministry of Trade, Industry and Energy said it will analyze the KHNP’s sunk costs to provide compensation for the company, which spent 592.5 billion won ($536.2 million) improving its facilities to get approval for an additional 10-year operating license.

“The government plans to compensate [the KHNP] for legitimate and reasonable costs incurred by its complying with the energy transformation road map,” the ministry said in a release.

The 30-year operational life cycle of Wolsong 1 in Gyeongju, North Gyeongsang, ended in 2012 but was extended for another 10 years to 2022. It is now the nation’s oldest reactor, following the permanent shutdown of Kori-1 in June 2017, and has remained idle since May 2017 for maintenance. Its power generation accounts for a mere 0.6 percent of the total, according to the company.

The KHNP also approved the scrapping of plans to build four nuclear reactors on the southeastern coast, sparking backlash from its labor union and local communities over costs already spent in the preliminary stages.

The Shin Hanul 3 and 4 units, which were scheduled to be built in Uljin County, North Gyeongsang, received construction approval in February 2017, while the process to push for the Cheonji 1 and 2 units in Yeongdeok, south of Uljin, did not proceed far.

The ministry said it will decide on the fate of special subsidies already given to the local communities in return for hosting the potentially dangerous facility and will consult with the provincial governments to develop alternative industries.

To help maintain the nuclear industry’s competitiveness, the government said it will expand investment to develop advanced nuclear decommissioning and maintenance technologies and support for the local supply chain, which is mainly composed of small and medium-sized companies.

To foster new growth drivers, the ministry also vowed to work with the local industry and related agencies to export Korean nuclear reactors abroad.

Korea has 24 nuclear reactors generating about 30 percent of the country’s electricity, but Seoul has vowed to boost the supply of power from clean and renewable energy sources while reducing reliance on nuclear and coal-fired plants.

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