U.S.-Korea summit confronted by growing apprehensions over Westinghouse agreement
South Korean President Lee Jae Myung and US President Donald Trump are set to meet in Washington on Monday for their summit. Amidst the anticipated discussions, nuclear energy cooperation is expected to be high on the agenda. One of the key points of interest is the potential entry of Korea Hydro & Nuclear Power (KHNP) into the US nuclear reactor market, partnering with Westinghouse.
The deal, however, has sparked controversy, with lawmakers criticizing KHNP for bowing to US pressure to secure a deal in the Czech Republic. The agreement restricts KHNP to pursuing nuclear projects in only 12 designated countries, while barring it from new deals in North America, Britain, Japan, Ukraine, and the EU, except for the Czech Republic.
The US aims to expand its nuclear energy capacity from 97 gigawatts to 400 gigawatts by 2050, a target that would require constructing approximately 300 new 1,000-megawatt reactors. The plan comes amid controversy over a separate agreement between KHNP and Westinghouse, which resolved Westinghouse's claims of intellectual property rights violation.
Under the 50-year deal, KHNP will pay an additional $175 million per reactor in technology licensing fees to Westinghouse. KHNP CEO Whang Joo-ho stated that the deal terms remain within acceptable limits but declined to provide detailed answers due to confidentiality obligations. KHNP is "considering various forms of cooperation" with Westinghouse, but no concrete details have been decided.
KHNP plans to enter the US market through a partnership with Westinghouse, while handling most of the construction work. The company has agreed to sign contracts for goods and services worth $650 million with Westinghouse for each export of a single nuclear reactor.
Industry observers view the US as eyeing Korean companies' technological expertise and construction capabilities to meet its ambitious nuclear energy expansion goals. An industry insider stated that Westinghouse lacks the construction capacity to independently build reactors, suggesting that Korean companies are likely to handle the construction in future projects.
The controversy has rattled nuclear-related stocks, with Doosan Enerbility, Kepco E&C, Woori Technology, and Kepco KPS all experiencing declines. The South Korean government has rejected assertions that the establishment of the joint venture would be included on the summit agenda.
The deal contains a provision requiring Westinghouse to verify the technical independence of Korean companies before they can bid on overseas nuclear reactor projects. However, the company explicitly commissioned by KHNP for the realization of nuclear power plant projects in the 12 selected countries has not been mentioned in the recent reports available.
The upcoming Korea-US summit promises to shed more light on this developing situation, as nuclear energy cooperation continues to be a significant aspect of the bilateral relationship.
