As the likelihood of new large nuclear power plants being built in Korea grows, construction companies are becoming more optimistic. With overseas nuclear orders also expected to increase, attention is on whether the sluggish construction market will recover.
According to the energy industry on the 20th, the Ministry of Climate, Energy and Environment conducted a public opinion survey last week on whether to build new nuclear power plants and plans to reach a conclusion in February and draw up the 12th Basic Plan for Long-term Electricity Supply and Demand (electricity plan). The previous administration of Yoon Suk-yeol confirmed the 11th electricity plan in Feb. last year, which said it would build two large reactors and one small modular reactor (SMR) by 2038. The survey is expected to be used to gauge whether to accept that as is or scrap it. The ministry also held public forums last month and earlier this month.
The current administration, which was expected to stick to a nuclear phaseout policy like the Moon Jae-in administration, is shifting course. Kim Yong-beom, the presidential chief of staff for policy, said in a recent interview with the Hankyoreh that "artificial intelligence (AI) and semiconductors are power guzzlers," adding that "building new nuclear plants is inevitable." Minister Kim Sung-hwan of the ministry effectively acknowledged the need for nuclear power as well, saying, "It is not easy to ensure stable power supply with renewables alone."
As signs emerge that the effectively halted domestic nuclear construction projects are being revived, construction companies' expectations are rising. Since May 2017, when the Moon administration took office, only one new nuclear project (Shin Hanul Units 3 and 4) has been approved to date. Nuclear construction projects are considered to have longer construction periods than general dwellings and civil engineering projects and to offer higher stability of revenue after winning orders.
A construction company official said, "It takes about 10 years just to build a new nuclear plant, but the large project cost offers the advantage of being able to generate stable revenue." Another construction company official said, "If a new nuclear project moves forward, the project cost will be around 20 trillion won," adding, "Although the margin rate is lower than in the dwellings business, the total project size itself is large, so it contributes greatly to operating profit."
Because the technical barriers to entry are high in nuclear construction, few companies can take on the work. Hyundai Engineering & Construction is considered the frontrunner. It has participated as the lead contractor in most major domestic nuclear projects, and in 2009 it joined the Barakah nuclear project in the United Arab Emirates (UAE), becoming the first Korean company to enter an overseas nuclear market. In addition, last year Hyundai Engineering & Construction signed a basic design contract for four large reactors with Fermia America in the United States, winning major nuclear-related orders in North America and Europe. This year, projects such as the Palisades SMR-300 in the United States and the Kozloduy nuclear plant in Bulgaria will also move into full swing.
Overseas entries into the nuclear market are expected to accelerate further. Last year, Korea won the new nuclear project in Dukovany, the Czech Republic, for the first time in 16 years since the Barakah project. The lead contractor is Daewoo Engineering & Construction, and the project cost is about 27 trillion won. That accounts for 40% of the overseas construction orders won by the domestic construction industry last year. Samsung C&T's construction division and DL E&C are also actively targeting the global SMR market. An SMR is a next-generation reactor technology that is smaller than conventional large reactors and integrates key components into a single unit, manufactured in a factory and then assembled on-site.