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South Korean nuclear group in talks to join UK’s NuGen newbuild project

13 September 2016

South Korea's state-backed nuclear group Korea Electric Power Corporation (KEPCO) is in talks to join the £10bn NuGen project to build three nuclear reactors at Moorside in Cumbria. The venture is currently 60% owned by Japan's Toshiba, which plans to use its Westinghouse reactor technology, and 40% by France's Engie, formerly GDF Suez.

Artist's impression of the Moorside site - Image: NuGen
Artist's impression of the Moorside site - Image: NuGen

Kepco first considered investment in NuGen in 2013 and talks were said to have been revived earlier this year by Tom Samson, NuGen's chief executive, who formerly worked closely with Kepco in the United Arab Emirates.

Sources confirmed reports in the Financial Times that Kepco was now nearing a deal to invest in the project. Engie is in the middle of a €10bn disposal programme and so could be looking to sell off part or all of its stake in NuGen given that new nuclear is no longer a main area of focus for the group. Toshiba could also be looking to reduce its share in the capital-intensive project.

NuGen has made no secret of the fact it is seeking new investors to help fund its project, on which it hopes to take a final investment decision in 2018.

Kepco's reputation was badly hit in 2012 by a safety scandal over the forgery of thousands of nuclear components. However, supporters point to its record in the UAE, where it has so far hit construction milestones in building reactors  at  Barakah under a $20bn deal awarded by Emirates Nuclear Energy Corporation (ENEC).

Prior to joining NuGen, Mr Samson served as ENEC's chief operating officer, working closely on the  Barakah project.

NuGen has so far insisted it will be unaffected by the outcome of EDF's Hinkley Point C project, which the new UK Government is currently reviewing. However, experts warn a decision to reject Hinkley after EDF has spent £2.4bn on the project would inevitably shake confidence in other group’s willingness to invest in new nuclear in the UK.

NuGen is expected to have a generating capacity of up to 3.8 gigawatts when all three reactors are completed, accounting for around 7% of Britain's total electricity demand.

The NuGen consortium is competing to build Britain's first new nuclear plant in a generation with French power utility EDF (EDF.PA).

Engie operates several nuclear plants in Belgium and is part of a consortium to build a nuclear plant in Turkey, but new Engie chief executive, Isabelle Kocher, wants to focus on renewable energy, energy efficiency and power networks.

Sources told Reuters that both companies have been looking to reduce their stake in NuGen for several months, but low wholesale power prices and tough competition for ever-cheaper renewable energy have darkened the investment outlook for nuclear energy in the UK.

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