Critics raise concerns over Westinghouse deal's impact
The agreement Korea Hydro & Nuclear Power (KHNP) and Korea Electric Power Corporation (Kepco) signed earlier this year with U.S.-based Westinghouse to end their intellectual property dispute reportedly includes a clause requiring Korea to provide Westinghouse with goods, services and royalties amounting to $825 million for every nuclear reactor that Korea exports outside of the country for the next 50 years.
The “global agreement” written out in January between KHNP, Kepco and Westinghouse stipulates that KHNP and Kepco must sign a goods and services purchase contract worth $650 million per reactor and pay $175 million in technology royalties for each reactor sold overseas, according to the nuclear power industry on Monday.
When asked by the Korea JoongAng Daily, KHNP declined to answer whether it was actually signed by the parties or just written out in paper, citing "confidentiality issues."
The agreement also includes a condition requiring Korean companies to pass a Westinghouse technology independence review when exporting next-generation nuclear technologies such as small modular reactors (SMRs).
This condition stems from the fact that Korean companies are developing SMRs by miniaturizing existing large-scale nuclear reactors originally designed using Westinghouse’s base technology ? meaning the U.S. firm intends to assess whether those designs still fall under its intellectual property.
The agreement came as Korea was seeking to finalize a contract for a 26 trillion won ($18.7 billion) deal to build new reactors in Dukovany, the Czech Republic. Westinghouse had filed a lawsuit in a U.S. court, claiming that KHNP’s latest Korean-designed APR1400 reactor, which was to be supplied to the Czech project, was based on its proprietary technology, disrupting the deal.
In response, KHNP began negotiations to end the legal dispute, ultimately leading to a resolution.
The deal has sparked fierce debate in Korea’s nuclear industry and criticism has emerged that the former Yoon Suk Yeol administration signed a deal with “poison pill” clauses in order to secure the Czech contract. Some critics say that the agreement is a losing proposition for Korea, arguing that the large royalty payments and procurement obligations to Westinghouse will sharply reduce Korea’s profits from nuclear exports.
With local participation usually guaranteed during nuclear construction, the share for Korean firms could become even smaller in overseas projects. The 50-year term of the contract also adds to the burden on the Korean part. The requirement that even SMRs must undergo Westinghouse’s review is also seen as a long-term hurdle. Though not yet commercialized, the global SMR market is expected to grow to over 400 trillion won by 2040.
However, many also argue that the move was unavoidable, given how close the Czech deal was to completion. If Westinghouse, which is backed by the U.S. Department of Energy, had continued to block the contract, the entire deal could have collapsed. Resolving the conflict swiftly was seen as a rational choice, since failure to do so could have had serious repercussions on Korea’s other nuclear exports.
Some also argue that cooperating with Westinghouse could benefit Korea’s nuclear ecosystem. While Westinghouse holds the original technology and built the world’s first commercial nuclear power plant in the 1950s, its ability to supply new reactors has diminished following the 1979 Three Mile Island accident, which halted nuclear construction in the United States.
Recently, Westinghouse has been expanding its collaboration with Korean companies such as Doosan Enerbility and Hyundai Engineering & Construction in projects where it has secured contracts.
“A partnership with Westinghouse is inevitable for Korean nuclear firms,” said an industry source who requested anonymity. “With U.S. President Donald Trump pledging to quadruple the number of nuclear reactors in the United States, this could also open doors for Korean companies to enter the American market.”
“There may be some disappointing aspects of the agreement with Westinghouse,” said a nuclear engineering professor, who wished to remain anonymous. “But a 50-year contract can be adjusted depending on future developments. Korea should maintain cooperation with Westinghouse while also pushing forward with independent technology development."