Kepco named preferred bidder for UK's NuGen

Korea Electric Power Company (Kepco) has been named as the preferred bidder to acquire 100% of the shares in NuGeneration (NuGen), the UK nuclear power development company owned by Toshiba. Kepco CEO Hwan-Eik Cho said in a company statement yesterday that, as preferred bidder, Kepco intends to "progress negotiations to a positive conclusion" to achieve a target closing of the proposed acquisition early next year.

NuGen, which was formed as the UK joint venture between Japan's Toshiba Corp and France's Engie, planned to build a nuclear power plant of up to 3.8 GWe gross capacity at a site in West Cumbria, using AP1000 nuclear reactor technology provided by Westinghouse. That reactor design completed the UK regulatory assessment process in March.

Toshiba owns Westinghouse, which filed for Chapter 11 protection with US courts in March. In July, Toshiba Corp became the sole owner of NuGen, after Engie exercised its right to require the Japanese conglomerate to purchase its stake.

In its statement yesterday, Kepco noted that the UK aims to build 18 GWe of new nuclear capacity and that NuGen will contribute around 3 GWe of this from the Moorside site in Cumbria, in the northwest of England.

Kepco said conclusion of the proposed acquisition requires agreement of definitive sale documentation and approvals from the UK and Korean governments.

"Kepco has been fiercely competing with international rivals and is pleased to reach this significant milestone in the process," Cho said. "Kepco is excited about bringing their delivery experience to the UK and build on the important nuclear heritage of the UK."

Kepco has engaged in thorough due diligence with legal, financing, accounting, technology advisers and reviewing project risks to "confidently take control of NuGen".

Kepco has stepped up its activities to achieve preferred bidder status by meeting the UK government and key figures in the nuclear industry, hosting a roadshow for the Korean nuclear industry, and visiting Japan for discussions with the CEO of Toshiba.

This paved the way for Kepco to enhance the opportunity to join the Moorside project by proactively explaining its excellent project performance and expanding public recognition within the UK, it said.

In a meeting with Secretary of State for BEIS Greg Clark on 19 October, Cho said he had explained why Kepco is "willing and able" to enter the UK through the opportunity at Moorside.

Kepco is scheduled to continue talks with Toshiba alongside engagement on the pre-feasibility study from the Korean government before closing the transaction early next year.

NuGen's future

Speaking at the Nuclear Industry Association's annual conference in London today, NuGen CEO Tom Samson said the preferred bidder announcement is a "significant milestone", but stressed that this was not yet the conclusion of the transaction.

NuGen will not provide a "running commentary" on the transaction in the weeks and months ahead, Samson said, "but we will continue to work tirelessly to bring these discussions to a successful conclusion so that we can move forward with delivering the Moorside project as soon as possible".

Samson said that, one year ago, he had set out the four questions the company had to address in its strategic review of the Moorside project - technology, ownership structure, funding solution and delivery model.

"The Kepco selection presents us with a solution that fully addresses the four questions that we set ourselves at the start of this process. On technology, the APR1400 tech has been operational now for one year in Korea and it’s a recognised Gen III+ design, and the first Gen III+ design to go into service in the world. On ownership, Kepco as a utility has the desire to invest and remain in the UK for a long time; they have no exit strategy at [the point of a] Final investment Decision - they're here to stay.

"On funding, they've got a balance sheet that’s prepared to support their technology and they've got strong Korean institutions that they’ll bring to the table to help with the funding. And on delivery, Team Korea - Kepco and their supply chain - have perhaps the most enviable delivery record in our industry; their performance in Korea over the last four decades of continuous build and their track record at Barakah provide compelling evidence that we can look forward with great excitement to working with those credentials here in the UK to deliver the next generation of new nuclear on time and on budget to the highest standards of quality and safety."

Changes

Asked about the schedule for the Moorside project with a new owner and a different reactor design, Samson said, "One of the first things we need to do where NuGen is entirely owned by Kepco is to then validate a lot of the work we’ve already done on NuGen to define what our new plan will be. That includes a new GDA for the AP1400 and the completion of the Development Consent Order process."

He said commissioning of the Moorside plant is now "likely to be towards the end of the 2020s or the 2030s".

Asked whether the Moorside site would be large enough to accommodate two AP1400s, Samson said, "There's a high likelihood that we may end up, not necessarily because of space constraints, but because of schedule and cost benefits, in limiting it to two units. We haven’t made that decision yet."

Kepco leads the consortium building four Korean-designed APR-1400 pressurised water reactors at Barakah in the United Arab Emirates for the Emirates Nuclear Energy Corporation (Enec). Construction of Barakah 1 began in 2012, with units 2, 3 and 4 following in 2013, 2014 and 2015. Units 1 and 2 are both expected to start up next year. Units 3 and 4 are expected to start up in 2019 and 2020. When complete, the power station will deliver up to a quarter of the UAE's electricity.

Prior to joining NuGen, in June 2015, Samson was COO of Enec.

Asked what he brought from that experience, especially with the prospect of Kepco as NuGen's new owners, he said, "Some of the key lessons from Barakah that we'll be bringing into NuGen is teamwork. There is definitely a feeling of one team focused on the outcome, which was delivering the power to the grid. I think that's how we'll be working with Kepco, as a one-team philosophy through NuGen, with a clear common purpose to deliver power to the grid. That's one of the key drivers that helped create that sense of purpose and focus in the UAE."

Tom Greatrex, chief executive of the NIA, said Kepco's announcement was an important step towards ensuring the UK has the low-carbon generation capacity required to meet its power demands for the future.

"West Cumbria has a long-established and highly-skilled nuclear workforce in an industry which contributes GBP4.3 billion to the north-west economy. This is a real opportunity for new, secure, reliable and clean power which will add to that economic footprint," Greatrex added.

Researched and written
by World Nuclear News