South Korea’s nuclear corporation in desperate effort to save Moorside nuclear plant project

Kepco in last-ditch attempt to save Moorside nuclear plant project https://www.ft.com/content/50389e18-a6df-11e8-926a-7342fe5e173fSouth Korean utility group looks at potential lenders to finance construction Sylvia Pfeifer in London, Song Jung-a in Seoul and Leo Lewis in Tokyo, 28 Aug 18

Korea Electric Power Corp is meeting lenders to finance the construction of a new nuclear power plant in west Cumbria, as it makes a last-ditch attempt to save the project. Kepco said it was “exchanging opinion with potential lenders” but noted that the Korean government, which owns a majority stake in the company, had said it was “too early” to enter financing negotiations. The South Korean group was named last December as the preferred bidder for Toshiba’s NuGen unit, which was to build the plant at Moorside. But the deal ran into problems after the UK announced in June that it was considering how the funding for new nuclear power plants should be structured. One model under review is for private investors to secure a return on a nuclear plant’s so-called regulated asset base (RAB). The following month, Toshiba said it was exploring alternative options for the business and had terminated Kepco’s preferred bidder status.

Toshiba has set a deadline to secure a deal by the end of September, according to people close to the negotiations. The company declined to comment. The persistent delays have prompted NuGen to review its operations. It started a 30-day consultation period at the start of August raising the prospect of about 100 job losses. Toshiba is believed to have spent hundreds of millions of pounds on developing the site so far. It was forced to pay close to $139m to buy a 40 per cent stake held by France’s Engie last year. The failure of the Moorside plant would deal a blow to the UK government’s plans to encourage the construction of new reactors to replace its ageing fleet.

A government spokesperson in Seoul confirmed the company had launched a joint study to ascertain whether the RAB model was “workable”. The Korean government is understood to remain keen to progress with the investment because it would give it a foothold in one of the few western nations backing the construction of new reactors. But it has said the investment must pass a “national audit” test before it can proceed.

Kepco wants to deploy two of its APR-1400 reactors at Moorside to generate a combined electricity of about 3GW — close to 7 per cent of Britain’s electricity needs. Kepco said it was “too early” to say whether it would be able to meet the criteria for the audit. A spokesperson for the Department for Business, Energy and Industrial Strategy said the government had “repeatedly engaged with Kepco and the government of the Republic of Korea both in Korea and the UK in support of ongoing Moorside negotiations”. “Ultimately, this remains a commercial matter between Toshiba and Kepco,” he added.