All you need to know about Korea’s biggest nuclear power deal with the Czech Republic

Industry

Published: 18 Jul. 2024, 18:01 Updated: 18 Jul. 2024, 18:46

All you need to know about Korea’s biggest nuclear power deal with the Czech Republic

Nuclear reactors operate in Dukovany, Czech Republic [Korea Hydro & Nuclear Power]

[NEWS IN FOCUS]

The Czech Republic’s decision to pick Korea as the preferred bidder for a $17 billion nuclear reactor project is putting the country on a promising path to becoming a major exporter of nuclear power plants.

The selection was critical for Korea as a litmus test to gauge a European nation’s perception of the country as the supplier of nuclear reactors, since the sensitive nature of the facility could convince buyers to favor providers within the EU bloc.

The decision on Wednesday to go with the Korean bid to build two nuclear reactors in Dukovany, an estimated 24 trillion won ($17 billion) project, saw Korea beat out France.

The announcement also comes with political implications as the export and use of nuclear power plants were key campaign pledges by President Yoon Suk Yeol. His predecessor, Moon Jae-in, declared a phaseout of nuclear power, which led to a drought in nuclear reactor-related deals during his term.

A Korean consortium led by the state-run Korea Hydro & Nuclear Power (KHNP) competed with Electricite de France, or EDF, France’s state-run electricity corporation, and previously with Westinghouse Electric from the United States, but the European country excluded the U.S. firm in January, citing a failure to fulfill its requirement.

KHNP teamed up with Doosan Enerbility, the country’s sole provider of major nuclear power equipment, and local builder Daewoo E&C to submit a final bid for the tender in April, after the Czech Republic expanded the size of the contract from one reactor to up to four.

‘Biggest’ nuclear reactor export

Should the Korean consortium move on to strike a formal contract in March of next year, the tender will grant it the right to build two nuclear reactors worth at least 24 trillion won, an estimation by both governments.

However, the deal could grow further if the Czech Republic decides to build two more facilities in Temelin as included as a binding option in the tender. The two Temelin reactors will cost about the same as the two in Dukovany, according to officials from the Ministry of Trade, Industry and Energy and KHNP, which means that the final deal could end up with a value somewhere around 48 trillion won.

“As for the undecided two, the Czech government will decide in five years,” one of the officials said. “Then, KHNP will automatically become the preferred bidder.”

Even without the option, the deal for the two Dukovany units marks the biggest nuclear reactor export for Korea, surpassing the one signed with the United Arab Emirates (UAE), a 20 trillion won contract in 2009 for four nuclear reactors in Barakah.

With the Czech Republic's decision, local firms are set to secure a second overseas nuclear power deal after the Barakah agreement.

Elektrarna Dukovany II, a subsidiary of Czech state utility CEZ, plans to build a 1,200-megawatt nuclear power plant in Dukovany. The construction of the new nuclear unit will begin in 2029, with commissioning slated for 2036.

Opening the European market floodgates

The Korean government perceives the upcoming contract with the Czech Republic as a springboard to boost its presence in Europe as a nuclear power supplier of choice.

With the Czech deal becoming its first nuclear reactor export case in Europe, Korea looks to secure more multibillion dollar nuclear reactor deals in the Netherlands, Poland, Finland and Sweden.

“We are carrying out a feasibility study [for the construction of nuclear reactors in the Netherlands] as requested by the Dutch government,” said Whang Joo-ho, president of KHNP, adding that discussions are also ongoing with the Polish government about a feasibility study.

Whang also said that KHNP intends to participate in the bidding for nuclear reactor projects in Finland and Sweden.

The selection by the Czech Republic also eased concerns surrounding the political clout of competing European suppliers.

"The successful bidding proves that the Korean consortium’s competitiveness in pricing, deadline adherence and support for creating value chains outweighs the political influence [of European players],” said Hur Min-ho, an analyst at Daishin Securities.

“Aside the Polish tender for two nuclear reactors, for which Korea is participating as the sole bidder, countries like the UAE, the Netherlands, Britain, Turkey and Ukraine will likely open bidding in the second half of this year,” he said.

Boon for Yoon

Korean President Yoon Suk Yeol, right, shakes hands with Czech President Petr Pavel during a bilateral summit on the sidelines of the UN General Assembly in New York. [JOINT PRESS CORPS]

President Yoon advocated for the resumption of nuclear power technology exporting, often citing it as his administration’s key initiative. The decision by the Czech government could boost the president’s political standing and public image at a time when he suffers persistently low approval ratings while his party suffers from a weak presence in the National Assembly following a landslide defeat in the April general election.

The president played a key role in securing the preferred bidder position, according to Industry Minister Ahn Duk-geun, during meetings with the Czech president and politicians.

He also wrote a personal letter to his counterpart, detailing how the consortium could contribute to advancing the manufacturing and technological sectors in the Czech Republic, according to the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily.

After news of the decision came out, President Yoon said on Wednesday, “I am deeply grateful to our businesspeople, workers in the nuclear power plant field, government officials and the people who supported us with one mind and joined us as Team Korea.”

“Our business competitiveness has once again been recognized in the global market,” Sung Tae-yoon, director of national policy at the presidential office, said in a press briefing, expressing expectation that the final contract will be signed.

“This is a great achievement 15 years after winning the order for the Barakah nuclear power plant, and we have established a bridge for exporting our nuclear power plants to Europe,” he added.

The presidential office expects that there will be ripple effects in both Korean and Czech industries.

The country is looking to become a powerhouse in nuclear power plant exports, with the government planning to export 10 plants by 2030. The first deal, the plant in the UAE, began operations earlier this year.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]