Kepco seeks closer US ties as part of nuclear export push

Korea Electric Power Corp. is looking to bolster ties with the US as it attempts to sell more atomic power stations overseas, according to Chief Executive Officer Kim Dong-cheol.

South Korea is vying to become a major nuclear reactor supplier to Europe and Asia, where governments are turning to the technology to curb dependence on fossil fuels and hit green goals. Korea has edged out western rivals, and has also emerged as an option for countries reluctant to partner with state-owned giants from Russia and China due to security concerns.

However, South Korea’s effort to export reactors is threatened by legal challenges from Westinghouse Electric Co. over the licensing of the US company’s nuclear technology. 

“I regard the dispute with Westinghouse as a temporary one,” the 69-year-old former lawmaker said in an interview in New York. “To win more of these nuclear projects overseas, both Korea and the US would benefit more if we pursue profit sharing based on a stronger alliance.”

Kepco’s unit, Korea Hydro & Nuclear, won a $17 billion contract to build reactors in the Czech Republic in July, a major step in Seoul’s goal of exporting 10 reactors by the end of the decade. Westinghouse appealed the decision to Czech authorities, claiming South Korea is using its intellectual property.

Expanding business abroad can also help Kepco shore up its balance sheet, as the state-run company is also heavily indebted after failing to fully pass on increased costs for coal and natural gas to domestic electricity consumers.

Kepco is looking to expand in the US, where aging and inefficient power grids are struggling to meet soaring electricity demand from artificial intelligence. During Kim’s visit to the US this week, the company signed an agreement with Burns & McDonnell Engineering Co. to jointly build a transmission line, he said.

However, the utility has posted multibillion-dollar losses after holding off from raising rates to shield consumers from inflation. That has forced it to resort to drastic restructuring measures, including asset sales.

“We’re doing everything in our power to stabilize our financial profile through restructuring and reducing costs,” Kim said. “We weren’t able to afford dividends in recent years, but we are thinking about offering them in either 2025 or 2026.”

While limited rate hikes helped avert a worse crisis, Kepco still needs a normalization of power bills in the fourth quarter of this year, Kim said, without putting a number on the required increase. The company’s debts also threaten to stymie the massive investment South Korea needs to integrate a higher share of renewable power and Kepco still generates about 60% of its electricity using imported imported fossil fuels.

As the nation’s monopoly power distributor, the utility also plays a critical role in helping South Korea meet its target to reach net zero emissions by mid-century. Kepco’s difficulties in shifting toward solar and wind have made the country a global laggard on emission cuts, and pose hurdles for the cleaner energy ambitions of companies including Samsung Electronics Co. and Hyundai Motor Co. 

“We are expecting an explosive surge in power demand from AI data centers and the rapid increase in electrification of transport,” Kim said. “To accommodate this, we have to have a variety of energy sources, and we need to be preemptive in securing sufficient power grids.”