"Korea Must Join Early Standardization Efforts to Lead in SMRs" [K-INVESTORS]

Seungyeol Lee, Partner at EY-Parthenon and Head of Infrastructure Team

"Korea Has Sufficient Competitiveness... Early Supply Chain Entry Is Key"

Collaboration Among Korean Companies with Full Nuclear Power Cycle Experience Is Also Crucial

On April 13, EY Korea held the 'EY Korea Energy Conference' with a focus on Small Modular Reactors (SMRs). This was the first time that EY Korea had hosted a seminar specifically on SMRs. According to EY Korea, the event attracted a larger-than-expected number of participants, as SMRs are gaining attention as a next-generation energy source due to rising power demand from sectors like artificial intelligence (AI) data centers.

The high level of interest was driven by domestic companies’ desire to gain a clear understanding of SMRs, which have not yet reached commercialization in Korea, and to alleviate their investment concerns. In fact, a survey conducted by EY Korea among conference attendees revealed that 88% of respondents were either already investing in SMRs, planning to do so in the future, or in the consideration stage. Nonetheless, they cited several obstacles to expanding SMR-related business: 41% pointed to uncertainty in policy consistency and support systems, 40% cited a lack of market and trend information, and 36% mentioned uncertainty in initial market formation and securing demand.

Seungyeol Lee, a partner at EY-Parthenon, is interviewing with The Asia Business Daily on the 6th at Park One Tower in Yeouido, Seoul. Photo by Jinhyung Kang

Seungyeol Lee, a partner at EY-Parthenon and head of the infrastructure team, who delivered a presentation on investment strategies according to the SMR supply chain structure at the conference, stated, "It is the role of a consulting firm to provide assistance upon client request," adding, "We are preparing tailored solutions based on each company’s specific needs." Lee also offered strategy suggestions for Korean companies aiming to secure a lead in the SMR market. He emphasized that Korean companies are highly competitive, having accumulated experience as one of the few countries to manage the entire nuclear power generation cycle, and advised, "Before full-scale commercialization begins, it is crucial to participate in early-stage standardization efforts and secure a position in the supply chain."

"Key Strengths Vary by Reactor Generation...Strategic Collaboration Is Needed"

Partner Lee stated that for Korean companies to establish themselves in the SMR sector, they must engage in strategic collaborations with other firms based on the unique strengths of each SMR type (Generation III and Generation IV). SMRs are divided into Generation III and Generation IV models. Generation III SMRs use water as a coolant and uranium enriched to 3-5%. These reactors inherit the existing nuclear power plant system, and licensing and standardization processes are underway, with some projects already in the construction phase. In contrast, Generation IV SMRs utilize various coolants such as sodium and use higher-purity uranium compared to Generation III. They are still in the demonstration phase, which is another significant difference. Lee explained, "Currently, achieving economies of scale is difficult for SMRs, so profitability depends on reducing unit costs through rapid standardization and repeated production," and added, "It is advantageous to enter the supply chain early by participating in initial standardization processes." He particularly suggested that mid-sized and smaller companies would benefit more from participating in the Generation IV supply chain. "Generation IV does not yet have an established supply chain because licensing is still underway," he noted. "Although uncertainty is high, securing an early position, setting up standardized models, and participating in repeated production processes will likely be advantageous."

For Generation III, he emphasized the importance of collaborating with SMR developers in areas such as equity investment or parts supply. Although the supply chain for Generation III is already well established, its stability and predictability keep risks relatively low. In fact, Korean companies such as Doosan Enerbility and Samsung C&T have been investing in US-based NuScale Power, a developer of Generation III SMRs, since 2019. Following this, Doosan Enerbility has been supplying reactor modules and materials, while Samsung C&T has participated in the basic design of SMRs in Romania.

Seungyeol Lee, Partner at EY-Parthenon, is being interviewed by The Asia Business Daily on the 6th at Park One Tower, Yeouido, Seoul. Photo by Jinhyung Kang

Korean Companies Spanning the Supply Chain, Increasing Potential for Collaboration

Lee stressed that Korea has a well-established nuclear power ecosystem and that collaboration between large corporations and mid-sized or smaller firms is crucial for leadership in the SMR sector. In Korea, Korea Hydro & Nuclear Power leads nuclear power plant design, while major construction companies take charge of engineering, procurement, and construction (EPC) roles in nuclear power projects. The value chain also includes main equipment suppliers like Doosan Enerbility and auxiliary equipment suppliers such as Taewoong. Lee explained, "Since large corporations have made significant equity investments in next-generation SMRs, there is potential for synergy if mid-sized firms actively collaborate and share investment risks when entering the market."

State-Led Commercialization and Alternative Energy...The Future of SMRs Is Not Far Off

SMRs are a power generation source that miniaturizes and consolidates the core components of traditional large-scale nuclear power plants into small cylindrical modules. While the principle of generating heat through uranium fission remains the same, the key difference is that modules are manufactured in factories and then installed on-site. Notably, SMRs are optimized as distributed power sources (small-scale power generation facilities located near consumption sites) since they can be constructed close to areas of electricity demand. This offers multiple advantages, such as reduced transmission and distribution costs, shorter construction periods, and lower capital requirements.

Seungyul Lee, partner at EY-Parthenon, is being interviewed by The Asia Business Daily on the 6th at Park One Tower in Yeouido, Seoul. Photo by Jinhyung Kang

Lee noted that, with commercialization already underway in major countries, SMRs are inevitably drawing interest as a future energy source. "Russia has already commercialized SMRs for military icebreaker power supply, and China is also set to commercialize them this year," he said. "Rapid progress has been made through state-led approaches, and given the intertwined issues of security and safety, government and national commitment are crucial."

He also highlighted the potential of SMRs as a stable base-load power source that can compensate for the drawbacks of renewable energy such as solar and wind. As the adoption of renewables expands, electricity price volatility could increase sharply, making SMRs a strong candidate for replacing phased-out thermal power generation. Lee added, "Solar power faces high volatility and site development constraints, while offshore wind power projects are being delayed due to the burden of large-scale construction costs."

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