Nuclear Phase-Out Abandoned... Yoon and Doosan Sharing the Same 'Energy' Boat

Concurrent Operation of Nuclear and New/Renewable Energy Projects
Possibility of Resuming Shin Hanul Units 3 and 4

President-elect Yoon Suk-yeol visiting the site of the halted construction of Shin Hanul Units 3 and 4 in Uljin County, Gyeongsangbuk-do, on December 29 last year when he was the People Power Party candidate. At the time, President-elect Yoon announced nuclear power pledges, including a full review of the nuclear phase-out policy and the immediate resumption of construction of Shin Hanul Units 3 and 4. (Photo by Im Gi, Source=Yonhap News)

[Asia Economy Reporter Moon Chaeseok] Doosan Heavy Industries & Construction, which suffered the greatest damage from the Moon Jae-in administration's 'nuclear phase-out policy,' is growing hopeful with the launch of the Yoon Seok-yeol government. This is due to the expectation that the energy transition policy will be thoroughly reconsidered following President-elect Yoon's pledge to 'abolish the nuclear phase-out.' Doosan Group appears highly encouraged, stating that its core affiliate, Doosan Heavy Industries & Construction, can recover sales by simultaneously pursuing nuclear and new renewable energy businesses.

According to the Financial Supervisory Service and related industries on the 11th, Doosan Heavy Industries & Construction's consolidated operating profit plummeted by 80.5%, from 791.2 billion KRW in 2016 before the nuclear phase-out policy was implemented to 154.1 billion KRW in 2020. The damage to Doosan Heavy Industries & Construction adversely affected the entire nuclear industry. According to an analysis by the Korea Nuclear Industry Association, the sales of domestic nuclear suppliers decreased by about 29%, from 5.5 trillion KRW in 2016 to 3.93 trillion KRW in 2019.

However, with the inauguration of the Yoon Seok-yeol government, the nuclear phase-out policy is expected to effectively end after five years, turning the situation around 180 degrees. In particular, for Doosan Heavy Industries & Construction, considered the most severely affected company, the possibility of recovering the sunk costs of Shin Hanul Units 3 and 4, amounting to 800 billion KRW, has increased. According to the industry, Korea Hydro & Nuclear Power, which was conducting the Shin Hanul Units 3 and 4 construction alongside Doosan, incurred sunk costs of 779 billion KRW due to the suspension of construction. Of this, Doosan Heavy Industries & Construction must bear 95%, or 739.3 billion KRW (including pre-fabrication costs, construction service fees, and support funds for the Uljin region).

However, many in the industry believe that President-elect Yoon's declaration to 'abolish the nuclear phase-out' should be seen not as a 'stroke of luck' for Doosan but as the result of industrial restructuring and technological development efforts. If Doosan had abandoned the energy business during the nuclear phase-out policy period, it would have been difficult to secure business sectors such as the highly profitable Small Modular Reactor (SMR) business, as well as liquefied natural gas (LNG), offshore wind gas turbines, new renewable energy, and hydrogen. A Doosan Heavy Industries & Construction official emphasized, "Regardless of whether the Shin Hanul Units 3 and 4 construction resumes, we will devote ourselves fully to new businesses such as offshore wind and gas turbines without skipping any area."

Thanks to diversification in the energy business, there are forecasts that synergy effects with the government's energy transition policy can be achieved in the short term by 2030 and in the long term by 2050. From Doosan's perspective, there is also the advantage that it does not need to hastily restructure its business due to the 'carbon neutrality' trend, which works favorably for risk management. A representative item is the LNG gas turbine business being installed at the Gimpo combined heat and power plant in collaboration with Korea Western Power, a subsidiary of Korea Electric Power Corporation.

From the government's standpoint, in the process of increasing the share of new renewable energy generation, it is necessary to secure a certain amount of LNG power generation for a specific period to prevent power crises and price surges caused by supply instability.

This year, Doosan plans to install LNG gas turbines at the Western Power Gimpo combined heat and power plant for demonstration. In the offshore wind sector, it is engaged in supplying equipment and signing long-term maintenance contracts for the 100MW Jeju Hallim offshore wind farm, as well as preparing to be the preferred developer for the Southwest Sea offshore wind farm. In the SMR sector, it is accelerating its business by investing 104 million USD (approximately 127.9 billion KRW) in NuScale Power, a specialized U.S. company, in 2019.

This content was produced with the assistance of AI translation services.