South Korea Seeks New Deals in the Global Reactor Market

  • slice of pieKEPCO and KHNP succeeded in completing the process of a design review at the U.S. Nuclear Regulatory Commission for their 1400 MW PWR. It’s not clear that there is a market for the design in America, or even the slice of a pie, given the current energy picture here.
  • KEPCO is seen by the U.S. as walking on thin ice by claiming that a modified version of the APR1400 is unencumbered by U.S. intellectual property, and that it can be sold to Saudi Arabia even if there is no 123 Agreement in place. There’s plenty of pie to be had there with prospects for two 1000 MW+ reactors likely to be put out for bids by Saudi Arabia later this year.
  • The United Arab Emirates has changed horses in midstream hiring a new Chief Nuclear Officer to try to get the startup schedule back on track for the first of four South Korean nuclear reactors.

NRC Certifies Korean APR1400 Reactor

The U.S. Nuclear Regulatory Commission (NRC) on April 30, 2019, issued a ruling that the APR1400 design is “fully acceptable for U.S. use.” The certification is good for 15 years and was issued to the Korea Electric Power Corp. (KEPCO) and Korea Hydro and Nuclear Power (KHNP).

KEPCO and KHNP submitted the Standard Design Certification Application on December 23, 2014. The massive application for Standard Design Certification was for the Advanced Power Reactor 1400 (APR1400), a 4,000-MWt pressurized-water reactor (PWR).

The certification allows a utility to reference the design when applying for a Combined License to build and operate a nuclear power plant. According to press materials distributed by the two South Korean firms involved in developing the reactor, the APR1400 is an evolutionary pressurized water reactor.

The technological roots are with CE System 80+ model. It produces 1400 MWe and has a 60-year design life. It is the next generation of reactors for South Korea following the deployment of 12 of units of the 995 MWe OPR-1400 design. Design certification by the Korean Institute of Nuclear Safety was awarded in May 2003. (Schematic and technical profile of the APR 1400 here – scroll down)

World Nuclear News reports that construction of the first two APR1400s – as units 3 and 4 of South Korea’s Shin Kori plant – began in October 2008 and August 2009, respectively. Unit 3, which was originally scheduled to enter commercial operation at the end of 2013, eventually reached first criticality in December 2015, was connected to the grid in January 2016 and entered commercial operation in December that year. Unit 4 achieved first criticality on April 8th of this year, with grid connection on April 22.

Construction of two further APR1400 reactors at Shin Kori – units 5 and 6 – began in April 2017 and September 2018, respectively. Unit 5 is scheduled to begin commercial operation in March 2022, with unit 6 following one year later. Two further APR1400 units are under construction in South Korea as units 1 and 2 of the Shin Hanul site.

Where’s the Market?

While all this is very good news for South Korea, the question remains, why go to the expense and trouble to certify a new reactor design in the U.S.? The market for full size reactors here is frozen and may not thaw out for a decade or longer.

Consider the following – four major U.S. nuclear utilities that already have COL for a total of six reactors have no plans to break ground in the foreseeable future. Worse, six units that were under construction have terminated their licenses after no buyers could be found for them. Who does KEPCO and KHNP think they are going to sell their reactor to here?

What comes to mind, and its a stretch, is that the NRC safety review and design certification is considered to be the “gold standard” for a new reactor. With deals pending in the UK, and expressions of interest in several other countries, including Saudi Arabia, maybe the NRC imprint is a seen as a brand building, confidence booster for global sales.

A report in Business Korea noted that since the NRC’s design approval is recognized as an indicator of technological reliability by the global nuclear power industry, it will strengthen the overall export base for Korean nuclear power plants. KHNP is also reported to be on track to obtaining a European design approval on the reactor as a standard design for the EU-APR, a version of the APR1400 tailored to Europe, passed the screening of the European certification body in October last year.

Given the cost of a design review of a new reactor by the NRC, which can run upwards of $200-500M, that’s a lot of money that could have been spent elsewhere. KEPCO and KHNP must have had a very good reason to spend the money. Maybe in time we’ll know, but for now it is a mystery.

History of Recent Design Reviews in the US

South Korea is entering a U.S. market where nuclear plants are closing due to the low cost of natural gas. Currently, none of the following plants are scheduled for construction starts even though they have COLs from the NRC.

  • Fermi 3 – DTE Electric Company holds a COL issued May 2015 for a GE-Hitachi Economic Simplified Boiling-Water Reactor (ESBWR)
  • William States Lee III Nuclear Station Units 1 & 2 – Duke Energy Carolinas, LLC holds the COLs, issued December 2016, for two Westinghouse AP1000s
  • Turkey Point Units 6 & 7 – Florida Power & Light Company (FPL) hold the COLs, issued April 2018, for for these two Westinghouse AP1000s
  • North Anna Power Station, Unit 3 – Virginia Electric & Power Co. holds the COL, issued JUne 2017, for a GE-Hitachi Nuclear Energy/(ESBWR)

Three U.S. nuclear utilities started construction on total of six units and all of them have also quit work and terminated the licenses.

  • Levy Nuclear Plant Units 1 & 2 – Terminated (4/26/2018)
  • South Texas Project Units 3 & 4 – Terminated (7/12/2018)
  • V.C. Summer Units 2 & 3 – Terminated (3/6/2019)

The reasons vary for these decisions, but all of them point to market failures, management dysfunction, or both. These were ‘bet the company’ decisions to start and failure has, financially speaking, tough consequences.

With KEPCO’s track mixed track record in the UAE of good performance in building the reactors, but startup delays caused by management and safety issues, can it persuade a U.S. utility to consider an APR1400?

US / KEPCO at Odds Over A Close Call in a Play at Home

Out_at_Home_print

Image Credit – Reproduction of a painting by Fletcher C. Ransom (1870-1943) entitled “Out at Home.” Boston Public Library, Print Department, Source: Wikipedia Commons.

One of the “inside baseball” elements of a 123 Agreement under the Atomic Energy Act is that a country that has imported or licensed U.S. nuclear reactor technology for its own designs cannot resell a reactor with that technology to a third country that does not have a similar 123 Agreement.

This is the position South Korea finds itself in with regard to its plans to bid on an expected RFP from Saudi Arabia later this year. It finds itself thrown out at the plate in the U.S. despite success elsewhere on the field, e.g., building four APR14000s in the UAE.

According to a report dated April 26, 2019, published in the Energy Intelligence nuclear industry trade newsletter, a consortium led by KEPCO threw the U.S. a curve ball by announcing it is planning to offer a modified version of the APR1400 to Saudi Arabia.

The revised design is reported to be unencumbered by U.S. intellectual property and thus isn’t subject to the restrictions of South Korea’s 123 Agreement with the U.S. In words of one syllable, KEPCO sees the Saudi deal as money on the table, and it doesn’t want to be hobbled on the path to taking it by the requirements of U.S. export regulations.

This claim has DOE Energy Secretary Rick Perry coming on to the field from the dugout. He’s reported to have demanded that KEPCO stop the effort immediately. For KEPCO’s part, the answer was also reported to be an astonishing reply of “rotate,” or something equivalent of that in Korean. Understandably, he’s not about to take “no” for an answer.

Energy Intelligence reports that DOE is considering taking drastic steps, including asking the Justice Department to bring criminal charges against KEPCO executives if they don’t back down. DOE’s hair is also on fire because the decision to proceed with the APR1400+, which is what the “clean” design is called, took place without the usual consultations.

Saudi Arabia has two reasons to want the South Korean reactors..

  • First, four of them are being built in the United Arab Emirates, and despite delays in commissioning the first unit, they are still good examples of South Korean technology and ability to build commercial units.
  • Second, South Korea has been working with Saudi Arabia on a 100 MW small modular reactor project since 2011, and both parties now have years of experience working together. Relationships matter a great deal in the Middle East, and South Korea certainly has one with the Saudi energy ministry.

Another issue is that Westinghouse wants the Saudi work, and is not happy about the end run KEPCO is making with its claim it doesn’t need US permission to do the deal.

The Westinghouse vision has two possibilities both of which depend on Saudi Arabia doing something which do far it hasn’t indicated it wants to do, and that is to sign a 123 Agreement with the U.S. that gives up on uranium enrichment.

First, it would like to win the business as a vendor of AP1000 nuclear reactors and control the supply chain for all components. In an international deal like this, the firm may have to share, especially for non-nuclear long lead time systems like turbines, transformers, etc.

Second, even if the Saudi energy ministry decided it really wanted South Korea, Westinghouse could still earn a healthy profit as a supplier to KEPCO of pumps, instruments, etc., if there was a 123 agreement.

None of this is going to happen if Saudi Arabia and the U.S. don’t come to terms on a 123 Agreement, and, South Korea decides to roll the dice with its plan to offer a APR1400+ design.

A final issue is that while KEPCO, Westinghouse, and the U.S. government arm wrestle over who has the right to do what, another vendor, possibly the Chinese, could waltz into Riyadh and win the business with their Hualong One.

UAE Hires a New Chief Nuclear Officer

A few weeks ago the MIT Technology Review magazine published an article detailing the issues faced by South Korea’s project in the United Arab Emirates (UAE) to build four new 1400 MW PWR type reactors at a site on the Persian Gulf. Mostly, that article focused on problems with counterfeit parts in the supply chain. The article cast the project in a harsh light.

In my blog post on the magazine’s article, which reported multiple delays in startup of the first unit, now scheduled for late 2019 / early 2020, I found that an Operational Readiness Review (ORR) held in April 2018 triggered the delays which were announced the following month.

This week (5/5/19) the UAE plant operator announced it replaced its Chief Nuclear Officer (CNO), who came to the project in February 2018 from a major US nuclear utility, with a new CNO hired from First Energy. That utility has reactors in Ohio and Pennsylvania.

According to a report on NucNet, Nawah Energy Company, the joint venture nuclear operating subsidiary formed by Emirates Nuclear Energy Corporation and Korea Electric Power Corporation, has appointed Paul Harden as the company’s new chief nuclear officer.

Mr Harden will be responsible for operations at the Barakah nuclear power station, which will have four South Korean APR1400 reactors.

Mr Harden most recently he served as senior vice-president and chief operating officer for FirstEnergy Nuclear Operating Company in the US where he was responsible for the safety and financial performance of three nuclear sites.

Nawah Energy Company said in a  press statement that “Barakah is progressing steadily with overall construction more than 93% as of the end of March 2019. Unit 1 construction is complete and it is undergoing commissioning and testing.”

The UAE project has faced challenges with its safety culture and systems due in part as a result of not having access to a reactor in South Korea to conduct the training of new staff. Completion of that reactor was delayed by almost two years due to the discovery of counterfeit cables in the nuclear island and transformers in the switch yard. All of cables and equipment affected by forged certificates had to be replaced.

As to why the UAE plant operator replaced its CNO, the facts point to a desire by its senior management to switch horse in mid-stream as a result of the findings in the ORR, the complaints from the UAE nuclear regulatory agency(FANR) about safety culture issues, and the resulting startup delays of Unit 1. All of these facts are well known to key stakeholders in the UAE.

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About djysrv

Dan Yurman ~ For breaking nuclear news follow me on Twitter @djysrv or https://www.twitter.com/djysrv ~ About this blog and disclaimers for NeutronBytes Blog ~ https://neutronbytes.com/2014/08/31/welcome-post/ ~ Email me: djysrv@gmail.com ~ Mobile via Google Voice 216-369-7194 ~ Header Image Credit: http://apod.nasa.gov/apod/ap110904.html ~ ** Emails sent by readers about blog posts are considered to be comments for publication unless otherwise noted. ** The content of this blog is protected by copyright laws of the U.S. "Fair use" provisions apply. The RSS feed is for personal use only unless otherwise explicitly granted.
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1 Response to South Korea Seeks New Deals in the Global Reactor Market

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