South Korea Removes Shackles of Nuclear Phase Out Policy
- Jul 10, 2022 1:51 pm GMT
- South Korea Removes Shackles of Nuclear Phase Out Policy
- A Record Heat Wave in Japan May Speed Up Nuclear Reactor Restarts
- UK Delays Sizewell C Decision; Political Turmoil Causes Caution Flags
- PG&E to Submit Request to DOE for Funding to Keep Diablo Canyon Open
- France to Complete Nationalization of EDF
- Fermi-Energia Says SMR in Estonia Could be Online by 2032
South Korea Removes Shackles of Nuclear Phase Out Policy
- The New Government Reverses Phaseout Plans. Targets 30% Nuclear Share In 2030
- Seoul to Resume Construction of Two Units. President Says Building Reactors is a ‘Global Trend’
(NucNet contributed to this report) South Korea announced a new energy policy that calls for a “feasible and reasonable energy mix” with restarts for construction of the Shin-Hanul Unit-3 and Unit-4 nuclear power plants. The new policy is to increase the share of nuclear power to a minimum of 30% of electrical generation by 2030. The policy effectively reverses the previous administration’s plans to phase out commercial nuclear energy.
Former president Moon Jae-in’s policy had been to retire the country’s 24 commercial reactors by 2050 and to stop building new ones. Moon’s aggressive efforts to strangle the country’s nuclear utilities was a ‘populist’ and political strategy relative to their combined corporate economic power.
By contrast, new president Yoon Suk-yeol, who recently took office, is bullish on the need for South Korea to embrace nuclear energy. He has said earlier this week that building nuclear power plants is a global trend and that it is essential to the reduction of carbon and energy security. He specifically took note of the fact that the European Union parliament has now classified nuclear power as ‘green energy’ in its sustainable finance taxonomy.
The plan to boost the country’s electrical generation to 30% provided by nuclear energy means existing reactors will be kept in operation as long as regulations allow. Their contribution to the nation’s energy security currently stands at 27% of electrical generation.
According to a statement from the South Korean Ministry of Trade, Industry, and Energy, “The 30% goal for nuclear (electric generation) makes official the policy of increasing nuclear power utilization in view of [the need for] carbon neutrality and energy security.”
The ministry added that the new energy policy is intended to replace the previous government’s nuclear phaseout plan. The government said the new policy takes into account changing factors including South Korea’s desire for climate neutrality, the escalation of the Russia-Ukraine war, uncertainty in the global supply chain and energy security. A July 5th cabinet meeting chairs by President Yoon ratified the new policy.
South Korea Energy Use by the Numbers
According to International Atomic Energy Agency data South Korea’s fleet of 25 commercial nuclear plants generated about 28% of the country’s electricity in 2021. According to the World Nuclear Association, in South Korea the 25 reactors provide electricity from 23 GWe of plant generation capacity.
Total electric generation in 2020 is composed of: coal 227 TWh (39%); nuclear 160 TWh (27%); natural gas 151 TWh (26%); solar 19 TWh (3%); biofuels & waste 10 TWh; hydro 8 TWh; oil 7 TWh; wind 4 TWh.
According to the US Department of Energy, Energy Information Administration, South Korea’s energy-intensive heavy industrial sector, mostly manufacturing of machinery, shipbuilding cars & trucks, textiles, steel, and petrochemical production, drives the country’s electricity consumption.
In 2019, about 54% of electricity consumption came from industries, 26% from commercial and service sector enterprises, 14% from the residential sector, and 7% from other sectors such as transportation and agriculture.
With a focus on exports, South Korea was the world’s ninth-largest energy consumer in 2020.
Restarts of Reactor Construction
Work on Shin-Hanul-3 and Shin-Hanul-4 was halted in 2017 under the nuclear phaseout policy of the previous administration. According to press reports in South Korea, the government has said approvals would be completed and contracts concluded by 2024 so construction of both Shin-Hanul plants can resume in the first half of 2025.
South Korea has two APR-1400 units in operation at Shin-Kori-3 and Shin-Kori-4 and four units nearing completion or under construction at Shin-Hanul-1, Shin-Hanul-2, Shin-Kori-5 and Shin-Kori-6.
Planned Expansion of Exports of Nuclear Reactors
Business Korea reported that the government is going to set up task forces in 10 to 15 embassies globally this year to help South Korean nuclear power plant builders win contracts abroad. The locations of the task forces are predicted to include the Czech Republic, Poland, Saudi Arabia, the UK, the Netherlands, South Africa and Slovenia among other locations.
The government has also said it plans to spend $320 million over the next six years to develop next-generation small modular reactors with an eye towards exports.. The SMR will be designed to have power generation capacity of 300 MW or less. Several South Korean heavy industry firms have business commitments with U.S. developers of SMRs which may lead to collaboration in this area.
The Ministry of Trade, Industry and Energy said in a statement on July 7th that South Korea’s nuclear power plant exports are expected to increase based on the inclusion of nuclear power in the EU taxonomy.
“The European Parliament’s decision means that financing will be facilitated on the part of EU member states planning to build nuclear power plants such as the Czech Republic and Poland. “
South Korea’s state-owned Korea Hydro Nuclear Power (KHNP) said it is ready to take up to a 49% equity stake in Poland’s nuclear power program. Last May KHNP presented an offer to build six of its APR-1400 pressurized water reactors (PWRs) for Poland with a combined capacity of 8.4 GW, with the first reactor to be operational in 2033.
UK Interest in South Korea’s 1400 MWe PWR
The South Korean Trade Ministry also revealed that the head of the U.K. Department for Business, Energy and Industrial Strategy is about to visit South Korea for cooperation in the nuclear power industry.
One possible agenda item for the visit is to restart negotiations for South Korea to take on a new build at the Wylfa and Oldbury sites in the UK. Japan’s Hitachi, which was to develop four 1350 MWe ABWRs, two at each location, backed out of these projects citing the uncertainties of the UK’s commitment under BREXIT and the lack of a viable financing plan. Since then the UK has committed to the RAB financing plan which is a ‘pay-as-you-go’ method similar to the US CWIP financing method in regulated markets.
Another possibility is the Bradwell site which is now in play since UK PM Boris Johnson ejected Chinese state owned enterprises from an agreement that they could build a 1000 MWe Hualong One at that site in return for a 20% equity stake in the Sizewell C site. China took the Hualong One through the UK ONR GDA process as part of the deal which Johnson cancelled on security grounds.
Prospects in the US
In the U.S. South Korea has completed the safety design review process for its 1400 MWe PWR at the Nuclear Regulatory Commission. Korea Electric Power Corporation (KEPCO) and Korea Hydro & Nuclear Power Co., Ltd. (KHNP) jointly submitted the application in 2013.
In August 2019 the NRC certified the Korean-designed Advanced Power Reactor 1400 (APR-1400). The certificate states that the NRC finds the design fully meets US safety requirements. So far there are no near-term market prospects for the South Korean PWR in the US.
South Korea is nearing completion of four of its APR 1400s in the United Arab Emirates (UAE). The design of the APR1400 includes some intellectual property from Westinghouse. An agreement between the UAE and the US based on section 123 of the Atomic Energy Act allowed the $20 billion deal to go forward.
Prospects for a South Korean bid on a tender from Saudi Arabia, which does not have a 123 agreement, will depend in part on how the US State Department handles the issue.
In June Korea Electric Power Corp (KEPCO) says that it discussed with Westinghouse ways to cooperate on international nuclear power generation markets. South Korea has a goal of exporting 10 nuclear power plants by 2030.
The aim is to deepen cooperation in international nuclear power generation markets, KEPCO said, and follows the meeting between US President Joe Biden and President Yoon Suk-yeol in May which included an agreement to deepen ties in nuclear energy, with the discussions “expected to be the beginning of practical cooperation in the nuclear power sector between the companies of the two countries”.
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A Record Heat Wave in Japan May Speed Up Nuclear Plant Restarts
The combination of a record heat wave in Japan and a favorable political climate for nuclear energy, after years of caution caused by the Fukushima disaster, may result in speeding up reactor restarts.
The plan is now for at least 20% of electricity to be generated by nuclear energy by 2030, from a down sized fleet. The first two reactors restarted in August and October 2015, with a further eight having restarted since. Another 16 reactors are currently in the process of restart approval. A total of 10 reactors, six at Fukushima Daiichi and four at Fukushima Daini are permanently offline and in the process of being decommissioned.
Of particular interest are planned restarted of the seven BWRs at the Kashiwazaki-Kariwa site which is one of the largest nuclear power stations in the world. It consists of five 1,000 MWe BWRs and two 1300 MWe BWRs.
Progress towards restart there has been repeatedly delayed by management issues, including security gaffs, as well as deep distrust by provincial elected officials. In 2021 TEPCO, which is the owner and operator of the reactors, said in a business plan that it assumed unit 7 of the Kashiwazaki-Kariwa plant would be restarted in October 2022 at the earliest, and unit 6 would restart in April 2024. It also said that one of units 1-5 would be restarted in 2028. The Japanese Nuclear Regulatory Authority has the final say on restarts.
Heat Waves and Public Support for Nuclear Reactor Restarts
According to a Reuters wire service report, Japan’s push to restart nuclear reactors, shut down after the Fukushima disaster a decade ago, could get a tailwind as the governing coalition looks set for gains in a national election on Sunday.
Reuters reported that Prime Minister Fumio Kishida’s coalition is on track to expand its majority in the upper house of parliament, polls show, in an election where nuclear restarts have been an issue, along with inflation and defense.
Record heatwaves and authorities’ daily pleas to save energy have helped push Japanese voters toward the idea of more restarts. Local communities have substantial influence in the politics of restarting reactors after they receive regulatory approvals. Kishida’s Liberal Democratic Party (LDP) wants to boost nuclear back to 20%-22% of Japan’s energy mix by 2030 from less than 5% now.
The public mood related to energy security got a severe jolt last week after the government warned of shortages in electricity during the hottest June on record which prompted a surge in electricity demand. The prospect of brownouts or outright blackouts has resulted in a shift in public approval for nuclear energy. Reuters reported that a Mainichi newspaper poll in May found 47% favored restarts vs 30% opposed. This is a turnaround from 2018 when opponents outnumbered supporters 48% to 32%.
Voters have a grudging sense that restarts cannot be helped, said Daiwa Securities senior economist Toru Suehiro.
“The aversion towards nuclear power is waning a bit now since people have high utility bills and the power shortage on their mind,” Suehiro told Reuters.
“What’s clear from this situation is that we need to make more progress to restart nuclear reactors that are deemed safe.”
His brokerage estimates as of right now only four more reactors will come online by March 2024, bringing the total to 14 of the 33 available nationwide for commercial use, and increasing nuclear to 9% of Japan’s energy mix.
“There’s got to be some soul-searching over why action couldn’t be taken earlier,” Kengo Sakurada, head of the Keizai Doyukai business lobby, said last week. The government’s warnings to conserve energy caused some of Japan’s heavy industries to suspended production at their plants drawing comparisons to South Africa’s troubles with electricity supply which has limited economic growth in that country.
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UK Delays Sizewell C Decision; Political Turmoil Causes Caution Flags
A decision on whether to approve a £20 billion nuclear power plant has been delayed. The government was expected to make an announcement about the application for Sizewell C in Suffolk by July 8th. Business Minister Paul Scully said he had “set a new deadline of no later than July 20th for deciding this application.”
In a written statement to the House of Commons, Scully said that Business, Energy and Industrial Strategy Secretary Kwasi Kwarteng’s decision would now be set for July 20th.
Political turmoil caused by the resignation of UK PM Boris Johnson, and the resignation of more than 50 his key ministers, has thrown off the timeline for the huge energy investment. One of the issues is whether a new PM might stop the project. On the other hand, now former Chancellor of the Exchequer Rishi Sunak, who is one of a half dozen politicians vying for the PM’s job, is in favor of building the plant.
World Nuclear News, which is based on London, observed that although any change of leadership produces uncertainty around government direction and policy, it is thought likely that the energy strategy – which did not face any big challenge from Conservative MPs – will survive the forthcoming change of prime minister.
Mr. Scully said, without providing details, that the delay in the decision about Sizewell C is “to ensure there is sufficient time to allow the secretary of state to consider the proposal.”
He added, “The decision to set the new deadline for this application is without prejudice to the decision on whether to grant or refuse development consent.”
The government has already committed £100 million to Sizewell C and plans to take a 20% stake which would be worth £4 billion. In June the project was approved for public funding under the regulated asset base model (RAB).
French developer EDF will also take a 20% stake in the Suffolk power station. Taken together, the combined 40% stake is worth £8 billion. Outside investors are being sought to complete financing for the twin 1700 MWe reactors. Sizewell C is expected to cost a minimum of £20 billion.
Earlier this year, Kwarteng unveiled the UK’s supply security strategy, which included a pledge to boost nuclear energy generation from 7GWe to 24GWe over the next three decades. This is an increase from an earlier objective of 19 GWe.
According to the City AM news service, Sizewell C head of financing Julia Pyke argued the long-term dividends such as supply security are key objectives.
“To me this is a bit like: Was the 1858 sewerage system late and over budget? Yes, it was. Do you wish London didn’t have a sewage system? No, you don’t. Was the London Underground in Victorian era built late and over budget? Yes, it was. Do you wish you didn’t have the Circle Line? No, you don’t. So, there’s a lack of proportionality in the way that people look at the cost of these mega projects.”
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PG&E to Submit Request to DOE for Funding to Keep Diablo Canyon Open
Pacific Gas & Electric (PG&E), the owner and operator of the Diablo Canyon Nuclear Plant, said this week it will submit a bid to obtain funding under the US Department of Energy’s (DOE) $6 billion program to keep nuclear plants open. The government’s funding is intended to sustain CO2 emission free electric generation and to stabilize the grid. The utility has until September 6th to apply for funding from the Civil Nuclear Credit program.
The action has the support of California Governor Gavin Newsome, and Sen. Diane Feinstein who very recently reversed a decades old policy of opposition to nuclear power.
Sen. Dianne Feinstein, D-California, wrote an opinion piece June 15 in the Sacramento Bee, saying, “Drought could force California to significantly increase natural gas generation and power purchases from neighboring states. If California is to lead the clean energy transition, as state law mandates, Diablo must keep operating, at least for the time being.”
Diablo Canyon is the only nuclear power plant in the state. The 2,240 megawatts of production from the plant is scheduled to shut down Unit 1 November 2024 and Unit 2 in August 2025. The plant produces 9 percent of the state’s electricity.
A prolonged record heat wave has put a huge strain on the state’s electrical grid. The loss of the plant would very likely create rolling brownouts especially in highly urbanized areas like Los Angeles and throughout southern California.
Saying “we would be remiss not to put that on the table as an option,” Governor Newsom has spoken favorably of PG&E applying for funding from the Civil Nuclear Credit, or CNC, which is part of the recently passed infrastructure law. In a May 23rd letter to Energy Secretary Jennifer Granholm, Newsom’s Cabinet Secretary, Ana Matosantos, urged a change in the program’s eligibility requirements so that Diablo Canyon would be included. DOE granted PG&E a 60-day extension to submit its application.
Neither PG&E nor the governor’s office have said how much money the utility will ask for from DOE. A PG&E spokesperson said the utility “does not have a cost estimate to share with you now,” and added that extending Diablo Canyon operations beyond 2024 would require additional funding as well as approvals from federal (NRC), state (California PUC), and local regulatory authorities.
In the meantime, the California legislature passed a bill last week that allocates a reserve fund of up to $75 million to the Department of Water Resources and gives the agency authority to buy power from Diablo Canyon — as well as from fossil fuel power plants — when state power supplies run low.
PG&E in 2016 agreed to shutter Diablo Canyon after coming to an agreement with a combination of environmental and labor groups. The utility justified its action by saying that a combination of new natural gas plants and renewable energy (solar, wind) facilities would make for the loss of over 2 GWe of CO2 emission free power. Critics shredded the company’s claims and subsequent grid issues in California have borne them out.
The California Public Utilities Commission approved the deal in 2018. It is likely the groups involved in the 2016 decision will go to court to enforce the originally scheduled closure.
On June 27th, a group of 37 scientists, academics and entrepreneurs sent a letter to DOE Secretary Granholm in support of funding for Diablo Canyon.
“While California boasts a very high portion of electricity from renewable sources, California will have to boost its total renewable energy production by an enormous 20 percent in just two years to replace the clean energy being produced at Diablo Canyon,” the letter said.
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France to Complete Nationalization of EDF
(WNN contributed to this report) The French prime minister says the government will increase its shareholding in EDF from 84% to 100%, while the search for a successor to Chairman and CEO Jean-Bernard Lévy, who is approaching the mandatory retirement age, is under way. Prime Minister Elisabeth Borne told France’s lower house of Parliament: “I confirm to you today that the state intends to control 100% of EDF’s capital.”
Re-elected President Emmanuel Macron earlier this year proposed the re-nationalization of EDF as well as a big expansion of nuclear energy in the coming decades, with six new reactors planned, eight more considered as well as the development of small modular reactors.
Economy Minister Bruno Le Maire said the French government has set aside €12.7 billion for the full nationalization of state-controlled electricity provider EDF as well as other investments in the energy sector. Minority shareholders will need to be bought out by a mechanism that is still to be determined.
“It’s an investment, not spending,” Le Maire said which is necessary to secure full state control over the country’s strategic nuclear industry.
The French government is working with Goldman Sachs and Société Générale on how to take full management of utility EDF. The state owned enterprise is also gearing up for extra investments in nuclear reactors. As the same time it is facing significant financial challenges.
Corrosion issues at several reactors have reportedly sliced EDF’s electrical energy output, and the group has warned its core revenue can be hit by €18.5 billion this fiscal year. Also, EDF is very significantly over budget and behind schedule at two EPR projects, one in Finland and the other in France. It is building two more EPRs at the Hinkley Point C site in the UK and is poised to begin a similar project at the Sizewell C site in the UK. In summary, the firm is over-extended and needs a huge infusion of new capital to meet its current and future obligations.
“In the short term, you have a situation in which the financial results are going to be catastrophic,” Nicolas Goldberg, a senior power analyst at Columbus Consulting told wire services. “There was going to be a need for another recapitalization and the status quo was no longer possible.”
Two options are being considered to finance the nationalization scheme. The first is a protracted legislative process which French President Macron probably won’t favor because his party doesn’t hold a majority in the French parliament. The other is to issue financial bonds at market rates which would be much faster and politically cleaner to execute the buyout of minority investors and to finance Macron’s ambitious plans for new reactors.
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Fermi-Energia Says SMR in Estonia Could be Online by 2032
A nuclear power plant could be on-line and functioning in Estonia buy 2032 according to Fermi-Energia, a private sector nuclear energy firm. The plant would likely be a small nuclear reactors with a power rating of less than 300 MWe. A 300 MWe plant would provide about 20 percent of Estonia’s daytime electricity needs.
The company said it was encouraged to proceed with its plans by the recent decision by the EU parliament to designate nuclear energy as “sustainable.” The action opens nuclear power projects in EU nations to new investment.
Kalev Kallemets, head of Fermi Energia, said that the plant would not require state support for its construction. He said there was a better than 50% chance the plant could be built and be in revenue service by 2032.
“We need four 300 MWe units in total,” he said. At $4,000/Kw, the four unit installation would cost about $4.8 billion.
The firm sees a bigger opportunity for additional revenue streams in addition to generation of electricity.
“We are seriously looking at producing on a large scale in order to produce large amounts of hydrogen. In addition to electricity, fertilizer production also needs to be decarbonized on a large scale in Europe, and this is a very large market.”
Fermi has so far involved €3.9 million towards the development of the project, but investor interest is growing, Kallemets said.
The small and compact nature of Estonia and rapid decision making processes lend themselves to the project’s realization as well, he said.
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