As a large-scale project to build eight nuclear reactors in the United States moves forward, the timely procurement of critical components has emerged as a key factor that could determine the success of the entire undertaking. Given the nature of long-lead items that can take up to 70 months to manufacture, failure to establish a proactive ordering system could lead to delays across the overall construction schedule.
The governments of South Korea and the United States recently announced plans to pursue a “nuclear power framework” to build eight large-scale reactors in the United States. The project calls for the phased construction of six Westinghouse AP1000 units and two Korean-designed APR1400 units. The total project value could reach up to $120 billion, comprising $100 billion in construction costs and $20 billion in contingency reserves.
The most significant obstacle to nuclear plant construction is the lengthy manufacturing time required for major components. According to the Ministry of Trade, Industry and Energy, safety control panels have the longest lead time at 70 months, while most key items, including the process control system at 66 months and reactor internals at 65 months, have lead times of more than five years. The steam turbine generator package and steam generators also require 60 months and 57 months, respectively, making early ordering essential.
To reduce this procurement risk, the government is in discussions with the U.S. side on a plan to prepay up to $10 billion for long-lead items by the end of the year. The measure is aimed at expanding participation opportunities for domestic equipment manufacturers while minimizing construction delays. However, actual execution will require meeting domestic legal requirements, including a commercial viability review and reporting to the National Assembly.
Through this framework, the Korean-designed APR1400 will make its first entry into the U.S. market. Its entry into the U.S. market had previously been held back by an intellectual property dispute between Korea Electric Power Corp. (KEPCO), Korea Hydro & Nuclear Power (KHNP) and Westinghouse. The two countries have now agreed to amend the existing Settlement Agreement (SA) to enable the construction of two APR1400 units using a strategic investment fund.
Korean companies will also participate as engineering, procurement and construction (EPC) contractors and equipment suppliers in the construction of Westinghouse’s AP1000. In addition, plans are being pursued for Korean public and private companies to acquire a 5% to 10% stake in Westinghouse. The investment would allow Korean companies to share in project profits while further strengthening the nuclear energy partnership between the two countries. Kim Jeong-gwan, Minister of Trade, Industry and Energy, said the plan is to limit the investment to a symbolic level to minimize the financial burden on KEPCO and KHNP.
The outlook is not entirely rosy. Stringent licensing regulations and high labor costs in the United States have been major causes of construction delays and cost overruns in past large-scale nuclear projects. Westinghouse itself filed for bankruptcy protection in 2017 following delays in U.S. nuclear plant construction. Experts warn that if a local U.S. supply chain is not established and specialized labor is not secured, the risks could fall squarely on the Korean side.
Prof. Yoo Seung-hoon of Seoul National University of Science and Technology noted that it remains uncertain whether Korean companies will be able to handle all the required volume, given that new domestic nuclear power plants and small modular reactor (SMR) projects are also being pursued alongside the eight U.S. reactors. Ultimately, how proactively labor and supply chains are secured is expected to determine the project’s actual profitability.
The current announcement marks the establishment of a broad framework for nuclear cooperation, with specific sites and project structures to be finalized on a project-by-project basis. The government plans to conduct a thorough commercial viability review before making a final decision on whether to proceed. It has also established the principle that South Korea will not bear any additional costs beyond $30 billion per two reactors.
Source: BusinessKorea