© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
November 19, 2013 3:38 pm
A Korean nuclear company that has been rocked by a domestic safety scandal is close to becoming a major investor in the UK – a development that could hit public confidence in the country’s much-vaunted nuclear renaissance.
Korea Electric Power, or Kepco, is in talks to join the NuGen consortium, which has an option to build a reactor near Sellafield in Cumbria.
A spokesman for Kepco confirmed it was considering taking a stake in NuGen but a deal is still some way off. “We have reviewed this, but nothing has been decided yet,” he said.
But some UK industry figures have expressed concern.
“Why would you want anyone with that kind of safety record?” said one person with knowledge of the NuGen negotiations. He said it risked “damaging the public perception of nuclear in the UK”.
But such concerns are likely to grow as more and more overseas state-owned groups enter the British marketplace. “If major pieces of UK energy infrastructure – not just nuclear – are owned by investors from afar, it’s going to give rise to a level of public disquiet that we haven’t seen so far,” said Nick Pidgeon, head of the Understanding Risk Research Group at Cardiff University.
The NuGen development highlights how reliant the UK is on foreign investors for its nuclear renaissance. Last month, the government struck a deal with EDF of France and two Chinese state energy groups to build the £16bn Hinkley Point C in Somerset, the UK’s first new nuclear plant in a generation.
South Korea’s nuclear scandal broke last November, when the country’s atomic watchdog said safety certificates for thousands of components procured by Korean reactors over the previous nine years had been forged. Three reactors were shut in the wake of the revelations.
Last month, Korean authorities said that after a five-month investigation, it had ascertained that 277 of 22,000 documents related to safety tests on parts at 20 reactors had been faked.
They said they had indicted 100 people, including senior executives at state-run energy companies, on corruption charges. These included a former chief executive at Korea Hydro and Nuclear Power (KHNP) and a vice-president of Kepco.
The scandal has cast a pall over South Korea’s international ambitions for its nuclear industry. The country aims to become the world’s third-largest exporter of nuclear technology by 2030 and sell 80 reactors worldwide over the next 20 years. A key milestone came in 2009, when it unexpectedly won a $20bn deal to sell nuclear plants to Abu Dhabi.
Some observers said Kepco should be welcomed into the UK, despite its domestic travails. Tim Yeo MP, chairman of the House of Commons energy select committee, said the scandal should have no bearing on the company’s UK ambitions “provided that any operation is subject to the same inspection regime as other installations in the UK”.
The future of NuGen has long been uncertain. The company, which is a 50:50 joint venture between GDF Suez of France and Spain’s Iberdrola, has an option on land on the West Cumbrian coast and plans to develop a nuclear plant there. But the option expires next year, after which the UK government might decide to re-auction the land rights.
The FT disclosed in July that Iberdrola and GDF Suez were looking to find new partners for the venture, to spread the financial risk. Westinghouse, the nuclear manufacturer owned by Toshiba of Japan, is in talks to buy a stake, and Areva, the French engineering group, is also thought to be interested.
But the UK government wants them to team up with a deep-pocketed investor to make their offer more credible. SNPTC, the Chinese state nuclear group, initially looked at NuGen, but said it would only invest if it could use its own nuclear technology in the UK at a later date, a person familiar with the matter said. Iberdrola rejected this condition.
The person said the Koreans’ offer, in contrast, was unconditional, and they were satisfied with merely being an equity investor in NuGen. “They are prepared to work with Toshiba Westinghouse technology rather than their own,” another person familiar with the matter said.
Iberdrola and GDF Suez declined to comment.
Additional reporting by Simon Mundy
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in