Official announcement expected around Sept. 18; funds earmarked for large-scale nuclear expansion

Construction timelines of at least a decade cloud profit projections

Critics say Korea accepted all US demands, urge clear accountability

Units 3 through 6 of the Hanbit Nuclear Power Plant in Yeonggwang, South Jeolla Province. [Korea Hydro & Nuclear Power]
Units 3 through 6 of the Hanbit Nuclear Power Plant in Yeonggwang, South Jeolla Province. [Korea Hydro & Nuclear Power]

As the United States pursues a nuclear power revival to meet surging electricity demand driven by the spread of AI data centers, a large share of South Korea's planned US investment is expected to flow into the American nuclear industry. The two countries are discussing using $120 billion of Korea's $200 billion investment pledge to build eight large nuclear reactors in the United States, according to sources familiar with the matter. The arrangement would combine America's push to expand nuclear capacity with South Korea's proven construction capabilities.

Political and government sources said the two sides are expected to sign an MOU covering the construction of eight large reactors and related matters around Sept. 18.

Adding the proposed $120 billion nuclear investment to the $22.3 billion total project cost of the Encinal gas-fired combined-cycle power plant in Texas — Korea's first US investment commitment — yields $142.3 billion, or 71.2 percent of the total $200 billion pledge. Should the nuclear proposal take shape as an actual project, more than 70 percent of Korea's $200 billion US investment would be concentrated in nuclear and gas power generation.

Domestic legal and administrative procedures required to finalize the investment are in their final stages. Under the relevant framework, the plan must pass review by a project management committee chaired by the minister of trade, industry and energy and an operations committee chaired by the minister of economy and finance, followed by a report to the National Assembly. The project management committee — the first hurdle — examines the commercial viability and strategic and legal risks of candidate projects proposed by the US investment committee. A deep-dive review of the full range of US investment projects currently under discussion took place at a project management committee meeting held late last month.

The government is not expected, however, to specify construction sites, project scale or participating companies at this stage. The more likely approach is to identify nuclear power as a priority follow-on investment sector and then select specific projects after assessing individual profitability and the terms of US government support.

Meanwhile, Lee Ho-hyun, second vice minister of the Ministry of Climate, Environment and Energy, is scheduled to attend the G20 Energy Ministers' Meeting in Houston from Sept. 14 to 16 to advance bilateral energy cooperation issues.

The United States proposed nuclear power as a major investment target largely because of the electricity demand surge accompanying the spread of AI. New reactor construction in the US had been effectively stalled for decades due to high costs, lengthy build times and repeated project delays, but rapidly growing power demand — driven primarily by AI data centers — has renewed interest in nuclear energy as a cornerstone of energy security and electricity supply. Nuclear power currently accounts for about 20 percent of US electricity generation, yet new construction since the 1990s has been minimal.

The Donald Trump administration set a target in May 2025 to quadruple nuclear generating capacity from roughly 100 gigawatts to 400 gigawatts by 2050 and to build 10 new reactors by 2030. To shorten construction timelines, the administration moved to revise federal safety regulations and committed to deciding on new reactor approvals within 18 months. AI centers designated as critical defense infrastructure could also bypass nuclear regulatory review if they receive power from reactors built on Department of Energy sites.

For the US, cooperation with South Korea is essential to securing the technology and supply chain needed for nuclear expansion. While the US holds core intellectual property such as reactor design, it has largely lost its manufacturing and construction capabilities. "Collaboration with state-owned nuclear companies such as Korea Electric Power Corporation and Korea Hydro & Nuclear Power, as well as domestic firms with manufacturing and construction expertise like Doosan Enerbility and Hyundai E&C, is unavoidable," an industry official said.

The central question is ultimately commercial viability. The two sides had agreed that US investment would apply only to projects with sound commercial rationale. Under the profit-sharing structure, both countries split returns equally until the principal is recovered, after which Korea and the US divide proceeds in a 1-to-9 ratio. Yet with nuclear construction requiring at least around a decade, the scale of returns and the timing of cost recovery remain difficult to gauge. Some observers warn that investment risks could mount if the US nuclear expansion policy falls behind schedule or if regulatory and construction timelines stretch further.

The Alaska LNG project may also be included among the major US investment items. That project has long been regarded as high-risk due to enormous construction costs and questions about its commercial viability. Ministry of Trade, Industry and Energy Minister Kim Jung-kwan said last year that a feasibility study was underway on the US side and that direct investment would be difficult. Concerns about the project's viability — citing issues such as labor supply and transportation costs — date back more than 40 years to the Chun Doo-hwan era.

"We have essentially accepted all the projects the US side proposed, even those that lack commercial merit," one energy industry official said, adding that accountability should be clearly established if problems arise later. "If a subsequent probe or audit is conducted, the minister of trade, industry and energy and the rest of the negotiating team should not be allowed to escape responsibility," the official said.


oskymoon@heraldcorp.com