Specialist in Energy Policy
A South Korean consortium recently signed a contract to provide four commercial nuclear reactors to the United Arab Emirates (UAE), signaling a new role for South Korea in the world nuclear energy market. The $20 billion deal indicates that South Korea has completed the transition from passive purchaser of turn-key nuclear plants in the 1970s to major nuclear technology supplier, capable of competing with the largest and most experienced nuclear technology companies in the world. The South Korean government reportedly has established a goal for South Korea to capture 20% of the world nuclear power plant market during the next 20 years, and the importance placed by Seoul on the UAE contract was underscored by South Korean President Lee Myung-bak's presence at the signing ceremony in the UAE.
In the 1970s, South Korea launched its nuclear power program through the government-owned Korea Electric Company (now Korea Electric Power Corporation, KEPCO), which purchased the country's first nuclear power units from Westinghouse. In the early years of the Korean nuclear program, Westinghouse and other foreign suppliers delivered completed plants with minimal Korean industry input. After the first three units, Korean firms took over the construction work on subsequent plants, although the reactor systems, turbine-generators, and architect/engineering services continued to be provided primarily by non-Korean companies. In 1987, KEPCO embarked on an effort to establish a standard Korean design, selecting the System 80 design from the U.S. firm Combustion Engineering as the basis. Combustion Engineering won the competition for the Korean standard design contract by agreeing to full technology transfer, according to KEPCO. The technology transfer program resulted in the development of the APR- 1400 power plant, which is the design purchased by the UAE.
In the UAE deal, the South Korean consortium is headed by KEPCO and includes other major Korean industrial companies that are involved in Korea's rapidly growing domestic nuclear power plant construction program. The consortium also includes Pittsburgh-based Westinghouse Electric Company, which currently owns the U.S. design on which the Korean design is based, and the Japanese industrial conglomerate Toshiba, which now owns most of Westinghouse.
Because the AP-1400 is based on a U.S. design, U.S. export controls will continue to apply. Westinghouse plans to seek the necessary authorization from the U.S. Department of Energy (DOE) to transfer the technology to the UAE. The UAE recently reached a nuclear cooperation agreement with the United States in which the country agreed not to develop fuel cycle facilities to support its planned nuclear power program, which could ease weapons proliferation concerns. The UAE program may establish a precedent for U.S. policy on future Korean exports to nonnuclear power nations, which is likely to be of continuing congressional interest.
The Korea-UAE nuclear plant sale also has been cited by the Korean news media as an important consideration in upcoming negotiations on the renewal of the U.S.-Korea nuclear cooperation agreement, a prerequisite under Section 123 of the Atomic Energy Act for nuclear trade. The current agreement expires in 2014, and the first discussions on renewal are likely within the next year. Congress will have an opportunity to review any new agreement before it takes effect.
Date of Report: January 21, 2010
Number of Pages: 14
Order Number: R41032
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Sunday, January 24, 2010