Foreign companies flock to build nuclear plants in the UK
Nuclear energy faces an uncertain future globally as concerns over safety and cost dog the industry. But in the UK, foreign investors are queueing up to back projects. The latest is South Korea. Its biggest power company is in talks to join the consortium backing a nuclear power station in Cumbria, in a sign of the continuing allure of Britain’s atomic ambitions to international companies. Kepco said last week it was interested in taking a stake in NuGen, which is 60% owned by Japan’s Toshiba and 40% by France’s Engie, confirming what had been an open secret in the industry for months.
Kepco’s president, Cho Hwan-eik, said that once the terms of a potential deal were ironed out, “we will be the first to jump into the race”.
The idea of a Seoul-based company developing the Moorside plant near Sellafield is not as strange as it might seem. The UK government needs new nuclear power stations to meet greenhouse-gas reduction targets and keep the lights on as ageing coal and atomic plants are retired. This month, officials reiterated how important nuclear will be to Britain’s future energy security, with projections that showed 38% of power coming from nuclear by 2035, up from 24% last year.
Potential investors have been drawn by the UK government’s enthusiasm and a nuclear standstill elsewhere, amid lingering safety fears in the wake of the Fukushima disaster and cost overruns at the Flamanville site in France which is using a new reactor design. As a result, South Korea has joined Japan, China and France in showing interest in British nuclear.
“It’s pretty simple. We are the only people building new nuclear power stations and we have by far the biggest new nuclear programme outside China for the next 10 years,” said Peter Atherton, an analyst at consultancy Cornwall Energy. “The civil nuclear programme globally doesn’t have any orders.”
One expert, Mycle Schneider, called the UK the “last hope” for the nuclear construction giants of the world. The Paris-based nuclear consultant said: “In Korea the political situation will dramatically change after the upcoming elections, [probably] not in favour of the nuclear industry. Success overseas will help survival at home. The Japanese industry clearly has no future at home and little prospects abroad [because of Fukushima].”
The UK has also dangled the prospect of economic support for foreign nuclear builders. French state-owned EDF, which is building two new reactors at Hinkley Point in Somerset at a cost of £18bn, struck a subsidy contract with the government that will see it guaranteed twice the wholesale price of electricity for 35 years. The deal means Hinkley would be an “absolute goldmine” when operational, Atherton said.
He said UK financial support was not dissimilar to the deal Kepco has in the United Arab Emirates, where it is building four new reactors paid for by the UAE’s state-owned utility. “The economics of the project, and the economic risks of the project, fall on the host government,” said Atherton.
There is also the prospect that the UK government could take a stake in one of the new nuclear sites. Leaks to Japanese media revealed officials in London and Tokyo had discussed the UK offering state finance to a project led by Japan’s Hitachi to build reactors next to the site of an old one at Wylfa in Wales.
Another lure for foreign companies is the prestige of having their reactor design pass the UK’s strict regulatory and licensing process. Antony Froggatt, a nuclear expert at the thinktank Chatham House, said: “It gives you that important status for getting orders elsewhere.”
That is particularly true of the Chinese state-owned company, which is providing a third of the money for Hinkley and whose design for a reactor at Bradwell, Essex is expected to complete the UK regulatory process in 2021.
“It would be important because it would be first time that reactor type was built outside China, so having it approved by the UK regulator would be significant,” said Atherton.
Kepco’s motives for the Moorside interest are not yet clear. It may want to get a foothold in the UK and provide the finance to build AP1000 reactors designed by Toshiba subsidiary Westinghouse, with the Office for Nuclear Regulation expected to give clearance for the technology imminently after a four-year process.
But it is thought to be more likely that Kepco would want to build its own South Korea-designed reactors at the site. Froggatt said: “The question is, does Kepco want to build AP1000s? The answer is no, it doesn’t want to build them. If it went ahead, I assume they’re buying the site and infrastructure. I assume they would put their own reactor through the licensing process.”
Kepco has a good recent track record of building reactors abroad. The first reactor in UAE is due to be connected to the grid this year, which Schneider said would be an “outstanding achievement” if achieved. In total, it operates 25 and is building three at home. The UK may be joining that list.