EU to Review Nuclear Power as a Green Investment
The authors are analysts of NH Investment & Securities. They can be reached at minjae.lee@nhqv.com and ys.jung@nhqv.com, respectively. -- Ed.
The major candidates in the Busan mayoralty by-election are in sharp conflict over nuclear power policy. In addition, discussions are underway whether the EU should classify nuclear power as a green investment.
Implications of: 1) Busan mayoralty by-election; and 2) EU concerns
Busan mayoralty by-election candidates Kim Young-chun (ruling party) and Park Hyeong-jun (People’s Power Party; the main opposition party) have differing policy stances with regard to the phasing out of nuclear power. Candidate Kim supports the existing nuclear power phase-out policy, stressing that: 1) there are calls around the world to reduce the use of nuclear power; and 2) high-cost structure brings into question the economic feasibility of nuclear power. In contrast, Candidate Park is arguing that the existing nuclear power plant policy should be reviewed as: 1) the global nuclear market is actually set to expand; and 2) renewable energy alone cannot cope with climate change.
According to media reports, there is discussion among experts whether the EU should classify nuclear power as a type of green investment. The EU has requested a relevant report from an advisory body, and it will make a final decision after reviewing for three months whether nuclear power should be classified as a green investment. For reference, in March of this year, five countries, including France and Hungary, requested policy support for nuclear power from the EU committee.
In general, a rise in a country’s portion of renewable energy begets problems at the power grid. But, current solutions are considered insufficient to solve these problems—ESS and hydrogen have technical and economic limitations when it comes to handling renewable energy. Therefore, nuclear power is being viewed by some observers as a bridge for dealing with such system issues. From 2H21, we expect to see political battles arise over nuclear power plant policy in the run up to Korea’s presidential election.
KEPCO E&C inks design contract for offshore wind power plant
On Mar 31, KEPCO E&C announced that it has signed a W228.9bn EPC contract to design and purchase equipment for a domestic offshore wind power project. After the Korean government’s declaration of its aim to make Korea nuclear power-free and coal fuel-free, the chances of KEPCO E&C participating in any new energy generation projects appeared to have diminished. However, thanks to the new offshore wind power project order, KEPCO E&C should be able to participate in offshore wind power plant projects involving KEPCO and its power generation subsidiaries (gencos) down the road.
We point out that KEPCO and its power generation subsidiaries are participating in most of the offshore wind power projects planned in Korea. Given that KEPCO E&C was previously only involved in nuclear power plant projects, we consider its participation in the new offshore wind power project as representing an opportunity to establish a value chain that ranges from project implementation to maintenance/repair of plants.