S. Korea Indicts 100 in Nuclear Graft Scandal, Considers Drastic Cut in Future Nuclear Power Share

South Korea in the past week indicted 100 people—including officials from the state-run nuclear power plant operator—of corruption in a scandal over forged nuclear safety certifications. It is now also considering freezing ambitions to maintain nuclear’s 29% share in its total power mix—which means scrapping a previous goal to increase it to 41% by 2035.

The scandal broke last November after the country’s energy ministry (formerly the Ministry of Knowledge Economy and now, the Ministry of Trade, Industry, and Energy [MOTIE]) ordered the shutdown of two nuclear reactors at the Yeonggwang nuclear complex owned by state company Korea Hydro & Nuclear Power Co. (KHNP), which operates the nation’s 23 nuclear reactors. The measure followed the Korea Electric Power Co. (KEPCO) subsidiary’s admission that eight unnamed firms that supplied parts had faked certificates covering thousands of nuclear power components over a period of nearly 10 years, from 2003 to 2012—affecting at least five reactors. Then in May, KHNP found safety-related control cabling with forged documentation in four other reactors, prompting the country’s nuclear regulator to force shutdown of Shin-Kori No. 2 and Shin-Wolsong No. 1 reactors—both commissioned in July 2012—for about four months for replacements.

An Oct. 10 government probe found 277 faked certificates for parts used in 20 operating reactors, as well as 2,010 false documents at eight plants that were offline or under construction. “Almost all” of the components have been replaced.

That probe also led to the indictment of about 100 officials from the state-run KHNP, parts suppliers, and certifiers on charges of forgery and corruption—including an unnamed former chief executive at KHNP and a KEPCO vice president. “We have completed inspection of test results of parts and materials used from five reactors under construction and the other suspended three. We found a total of 2,010 fake certificates there,” Kim Dong-yeon, a Government Policy Coordination official, said during a joint briefing last week with the Justice Ministry and MOTIE. “Parts or materials with falsified certificates will be replaced or go through the qualification process,” he said.

The government last week also unveiled a series of measures to prevent the recurrence of corruption in the nuclear industry. These include scrutinizing ties between public power corporations and their private suppliers and banning retired officials from state-run power entities from being recruited by subcontractors for at least three years. MOTIE also said it would revise the purchase process for nuclear components for increased transparency. The government is also reportedly considering a law that could strengthen management and supervision at nuclear facilities.

KNHP is one of six generation entities owned by KEPCO, the vast generation, transmission and distribution company whose majority stake is owned by the South Korean government. KNHP’s new CEO Cho Seok in September pledged to redesign the troubled nuclear entity to bring about changes in human resources as well as a cultural reformation. “I will put enormous efforts into recovering the morale of the organization that hit the ground due to the long-term investigation by the prosecution and the absence of a CEO, and solidify the cooperation with government, so that launching the new vision of KHNP can be established,” Cho said.

However, the scandal continues to widen. On Wednesday, KHNP revealed that disputed control cables at Shin Kori 3 and 4—where two domestically designed APR1400 third-generation light water reactors are under construction—failed a reevaluation. Replacement of the 920-km-long cables is expected to delay completion of the reactors previously anticipated in December 2013 and 2014 by at least six months to a year and cost more than $2.8 billion, KHNP said.

The implications are vast. KEPCO, which produces about 90% of South Korea’s total power has suffered deep losses for five years straight because government-controlled retail power prices remain stagnant. The company in 2009 won a lucrative $20 billion deal to build four APR1400s in the United Arab Emirates, and it is staking its financial future on exports of up to 80 APR1400 reactors by 2030. In late September, for example, KEPCO and KHNP submitted the APR1400 reactor design for certification by the U.S. Nuclear Regulatory Commission.

But the delays at Shin Kori 3 and 4 will also further pinch already lacking power supplies in South Korea, which this summer saw precariously low reserve margins and was forced to slash power use by 6 GW to counter a total grid failure. Complicating South Korea’s power supply shortages are a number of other delays in the construction of new power plants, artificially depressed power prices, and the country’s carbon trading system, which is slated to begin in January 2015. At the same time, the country that imports 96% of its fuel needs is in heated competition for coal and liquefied natural gas (LNG) imports with its energy-hungry neighbors China and Japan.

Meanwhile, the documentation scandal and concerns stemming from the Fukushima accident in Japan have eroded public confidence in the country’s lofty nuclear expansion aspirations as the best means to achieve long-term energy security and environmental goals.

A joint working group on the second phase of the national energy framework, which involves 60 representatives from industry, academic institutions, and civic bodies, on Monday recommended the government reduce energy reliance on nuclear power to between 22% and 29%, drastically lower than a 2008 state-proposed goal of 41% by 2035. It also proposed that renewables should continue to account for about 11% of the country’s power mix by 2035.

At the end of 2012, coal generation (in TWh) accounted for 39% of the country’s power profile, LNG, 22.4%, while nuclear took a 29% share. Wind made up 1%, and other renewables just 2%, while hydro constituted an 8% share.

Although not a binding directive, the group’s recommendation is expected to influence the country’s future energy policy.  The energy ministry’s long-term plan will be finalized this year pending public feedback and cabinet approval.

The report was released as South Korea hosts the 22nd World Energy Congress in Daegu, an international energy event that is held every three years and is attended by government ministers, industry leaders, and energy experts from more than 114 countries.

Look for an in-depth analysis of South Korea’s power sector in POWER‘s upcoming November issue.

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)