Modeling of nuclear power plant export competitiveness and its implications: The case of Korea

Accepted Manuscript Modeling of Nuclear Power Plant Export Competitiveness and its Implications: The Case of Korea

Seungkook Roh, Jae Young Choi, Soon Heung Chang PII:

S0360-5442(18)32029-2

DOI:

10.1016/j.energy.2018.10.041

Reference:

EGY 13938

To appear in:

Energy

Received Date:

01 June 2018

Accepted Date:

07 October 2018

Please cite this article as: Seungkook Roh, Jae Young Choi, Soon Heung Chang, Modeling of Nuclear Power Plant Export Competitiveness and its Implications: The Case of Korea, Energy (2018), doi: 10.1016/j.energy.2018.10.041

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Modeling of Nuclear Power Plant Export Competitiveness and its Implications: The Case of Korea

Seungkook Roha, Jae Young Choib*, Soon Heung Changb

a: Nuclear Policy Research Center, Korea Atomic Energy Research Institute (KAERI) 989-111 Daedeok-daero, Yuseong-gu, Daejeon, 34057, Korea

b: Department of Nuclear & Quantum Engineering, Korea Advanced Institute of Science and Technology (KAIST) 291 Daehak-ro, Yuseong-gu, Daejeon 34141, Korea

*: corresponding Author: [email protected]

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Abstract

Currently only six countries worldwide are considered to have the capability necessary to export nuclear power plants, each with unique advantages: Korea, the United States, Japan, Russia, China, and France. Despite abundant reports documenting successful plant exportation, it is difficult to obtain official accounts that reveal the main factors that lead to successful export due to the secretive nature of nuclear power plant contracts. This study developed a model comparing the competitiveness between nuclear power plant supplier countries. The model 1) categorizes and classifies various criteria for nuclear power plant export and 2) assigns weighted values on each criterion based on an AHP analysis to 3) compare the competitiveness of the export-capable countries based on the developed framework. The analysis showed that China has the highest competitiveness followed by Russia, Korea, the United States, Japan, and France, in decreasing order. In this context, it is imperative for Korea to construct consumer oriented export packages and target countries with strong leadership, countries that disregard the nuclear fuel cycle, countries that require fast nuclear power plant adoption, or countries that are pro-American.

Keywords

Nuclear power plant, export competitiveness, NPP

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Highlights:



We provide a comprehensive model to evaluate the competitiveness of exporting NPP.



An AHP analysis based on expert opinions reinforces the model.



China is the most competitive nation followed by Russia, Korea and the others.



Korea must build consumer oriented export packages.



Korea must target countries with strong leadership that require fast NPP adoption.

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1. Introduction

The 2011 Fukushima nuclear disaster did not hamper worldwide demand for nuclear power plants (NPPs) with NPP construction being pursued globally, most notably by Czech Republic, the United Kingdom, and Saudi Arabia. These countries do not possess the necessary technology, funds, or professionals and have to import NPPs. Only six countries – Korea, France, Japan, China, Russia, and the United States - are regarded as having the capability to export NPPs and each of those countries has its distinct advantages [1, 2]. Based on their respective advantages, the six countries made numerous NPP export contracts over the past decade, as listed in Table 1. However, despite these successful exports, it is difficult to determine official deciding factors that led to successful contracts due to the secretive nature of NPP export contracts [1]. As a result, it is difficult for both supplier countries and countries considering importing to accurately gauge the NPP market. In response, in this study, we developed a model to accurately compare the export competitiveness between the supplier countries.

The NPP export competitiveness comparison model classified the various criteria for export into tiers 1, 2, and 3 criteria. The classified criteria were then weighted according to an AHP analysis [3]. Of course, it is difficult to generalize the weight of each criterion due to systematic and cultural differences of importing countries. Therefore, we considered the general requirements posed by the majority of import hopeful countries when deciding the weight of each criterion. The six

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countries were subsequently compared based on the weighted criteria and assessed for their overall competitiveness as well as their advantages and disadvantages.

[Table 1. Export-Import of NPPs over the Past Decade] Model

Capacity (Gross, MW)

Start

APR1400

1,390 x 4

2012.07.18

UC

EPR

1,720

2005.08.12

Yaogu(Taishan)1-2

UC

EPR

1,750 x 2

2009.11.18

UK

Hinkley Point C 1-2

PL

EPR

1,630 x 2

India

Jaitapur 1-2

PL

EPR

1,650 x 2

Japan

Turkey

Sinop 1-4

PL

ATMEA-1

1,100 x 4

China

Pakistan

Karachi 2-3

UC

HPR1000

1,100 x 2

Argentina

( Unnamed )

PL

HPR1000

1,000

China

Tianwan 3-4

UC

VVER-1000

1,060 x 2

2012.12.27

Belarus

Belarusian 1-2

UC

VVER-1200

1,194 x 2

2013.11.06

Bangladesh

Rooppur 1-2

PL

VVER-1000

1,000 x 2

Egypt

El-Dabaa 1-2

PL

VVER-1200

1,200 x 2

Finland

Hanhikivi 1

PL

VVER-1200

1,200

Hungary

PAKS 5-6

PL

VVER-1200

1,200 x 2

India

Kudankulam 3-4

PL

VVER-1000

1,000 x 2

Iran

Bushehr 2-3

PL

VVER-1000

1,057 x 2

Jordan

( Unnamed )

PL

VVER-1000

1,000 x 2

Turkey

Akkuyu 1-4

PL

VVER-1200

1,200 x 4

China

Haiyang 1-2 Sanmen 1-2 Haiyang 3-4 Lufeng 1-2 Pengze 1-2 Sanmen 3-4 Taohuajiang 1-2 Xianning-Dafan 1-2

UC UC PL PL PL PL PL PL

AP1000 AP1000 AP1000 AP1000 AP1000 AP1000 AP1000 AP1000

1,250 x 2 1,250 x 2 1,250 x 2 1,080 x 2 1,250 x 2 1,250 x 2 1,250 x 2 1,250 x 2

Exporter

Importer

Site

State

Korea

UAE

Barakah 1-4

UC

France

Finland

Olkiluoto 3

China

Russia

USA

5

2)

3)

1)

construction

2015.08.20

2009.09.24 2009.04.19

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1)

First unit of NPP sites

2)

Under construction

3)

Planned

2. Literature Review

As countries have strived to accumulate wealth by active exportation, research on export competitiveness, especially pro-exportation, has flourished [4]. However, research on export competitiveness of NPPs has been limited due to its complexity. Export of NPPs requires technological, construction, and management expertise for NPP design; furthermore consideration must be made regarding the size of the nuclear industry, competitiveness, and professionals, and even an indirect understanding of the economy, finance, nuclear policy, foreign affairs, etc., of the supplier country is required [2, 5]. Therefore, instead of referring to academic literature that primarily deals with the NPP export competitiveness, the International Atomic Energy Agency (IAEA) report was referenced to assess the overall export competitiveness. The IAEA Guideline names Nuclear Technology, Nuclear Fuel Cycle, Finance, Commercial Capability, and Technology Transfer as the main factors that determine export competitiveness of NPPs [5].

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[Fig. 1. NPP Competitive Model of IAEA]

However, the model fails to reflect the change in export trends after Korea’s export to UAE in 2009 [1]. Where previously a heavier emphasis was placed on technology, economic viability, financial support, and industrial competitiveness of the consortium, recent trends demonstrate that the diplomacy of the consortium countries, including additional package deals and policies, also has a dramatic impact on NPP export. A prime example is the case of Korea in 2009 [1]. Korea was considered an outsider in NPP export in 2009 but was made the prime contractor of the UAE NPP project via active marketing and implementing supporting policies, including package deals, on the part of the Korean government. On a similar track, Russia’s successive contracts with Turkey, Jordan, and India were based on unprecedented financial conditions, back-end nuclear fuel cycle service, technology transfer, and adoption of a total package strategy, which had not been dealt with in previous assessment models. The political and diplomatic support of the government significantly aided the nuclear export efforts of the consortium. Additionally, the continuation of the domestic nuclear program became an important factor underlying NPP export competitiveness. Japan’s domestic nuclear industry lost momentum post-Fukushima and the United States’ nuclear industry lost its competitiveness due to a decrease in economic feasibility. An NPP project spans more than 60 years from the decision to adopt NPP to NPP retirement. Owing to the duration of each project, importing countries avoid contracting with supplier countries that are uncertain about their own domestic nuclear program. Uncertainty over the future of a domestic nuclear program may lead to 7

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issues with inspection and ex post facto management of an NPP and may also lead to an increase in operation cost. While previous reports by Kim & Chang, Park & Chevalier, and Park & Yong detailed the export competitiveness of NPPs, consideration of the above criteria has not yet been made. Therefore, this study presents a model based on the Bid Invitation Specification (BIS) of IAEA that includes the recently highlighted criteria [6, 7].

Another goal of this study was to provide weighted values of each competitiveness assessment criterion. Without weighted consideration of the assessment criteria, only the respective country’s advantages and disadvantages can be analyzed while overall competitiveness cannot be assessed. We adopted an AHP analysis to classify the criteria into tiers 1, 2, and 3 criteria to develop a model that quantitatively assesses export competitiveness of the supplier countries.

3. Model Development

3.1 Establishment of Model Hierarchy and Assessment Criteria

Prospective owners of an NPP are required to notify the bidding contractors of any requests and the current domestic state. The purpose of the BIS is to provide the bidding contractors with information to assess competitiveness prior to identifying the best-suited contractor. The BIS diagram of the bid process proposed by the IAEA suggests five bid evaluation criteria: technical bid,

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nuclear fuel bid, financial bid, commercial bid, and technology transfer and training bid. Each tier 1 criterion has numerous assessment tier 2 and tier 3 criteria [5, 7].

In this study, tiers 2 and 3 criteria were categorized and generalized and previously unconsidered qualitative criteria were added to develop the export competitiveness comparison model shown in Table 2. Nuclear fuel bid evaluation was expanded into nuclear fuel cycle and includes the backend nuclear fuel cycle. Based on Russia’s recent export cases, a new assessment criterion of governmental support was added to evaluate government policy support and package deals offered to the importing country [8, 9]. Previous literature and the Delphi method, which uses a group discussion between experts on NPP export, were used as references [10]. The discussion was carried out between seven professionals with over 20 years of experience on nuclear engineering, export, finance, economics and other related fields between them. The affiliations of the professionals were as follows: two professors from KAIST (Korea Advanced Institute of Science and Technology), two researchers from KAERI (Korea Atomic Energy Research Institute), one researcher from KAIST, and one researcher each from KHNP (Korea Hydro & Nuclear Power Co.) and KEXIM (The Export-Import Bank of Korea). Of the seven professionals, four held Ph.D. titles and three held Master’s titles. Four majored in Nuclear Engineering and one major each in Mechanical Engineering, Finance, and Economics. All the professionals were of Korean nationality and were and/or are still involved in Korean nuclear export research. The professional affiliated with KEXIM was in charge of finances in the 2009 UAE nuclear export project and the KHNP affiliated professional is currently involved in a 9

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nuclear export project to the Czech Republic. The KAERI professional is in charge of the current Korean nuclear policy development project.

As shown in Table 2, the tier 1 criteria for the competitiveness assessment model are Nuclear Technology Evaluation, Nuclear Fuel Cycle Evaluation, Governmental Support, Commercial Capability, and Technology Transfer Evaluation. Each tier 1 criterion has two to three tier 2 criteria under which are tier 3 criteria that focus on specific indexes.

[Table 2. Classification for Export Competitiveness of Nuclear Power Comparison] Tier 1

Tier 2

Tier 3

1. Nuclear Technology

1.1 Plant design technology

1.1.1 1.1.2 1.1.3 1.2.1 1.2.2 1.2.3 1.3.1 1.3.2 2.1.1 2.1.2 2.1.3 2.2.1 2.2.2 2.2.3 3.1.1 3.1.2 3.1.3 3.1.4 3.2.1 3.2.2 3.3.1 3.3.2 4.1.1 4.1.2 4.1.3 4.2.1

1.2 Plant construction technology

2. Nuclear Fuel Cycle

1.3 Plant operation technology 2.1 Front-end fuel cycle service 2.2 Back-end fuel cycle service

3. Governmental Support

3.1 Political support

3.2 Financial support

4. Commercial Capability

3.3 Diplomatic negotiation power 4.1 Costs

4.2 Organization of consortium 4.3 Supply chain

4.2.2 4.3.1 4.3.2 4.3.3 4.3.4

10

Original technology Demonstration of reference reactors Nuclear safety and design certification Designed construction period Punctuality of construction schedule Quality assurance and control History of plant availability Plant maintenance Capability of uranium procurement Capability of uranium enrichment Fuel fabrication and supply Availability of reprocessing service Support of final waste disposal Availability of leaseback option Nuclear industry promotion by government Power of government org. for nuclear export Nuclear R&D support by government Sustainability of domestic nuclear industry Scale of available ECAs Financing package Economic package Military package TCIC (Total Capital Investment Costs) Nuclear fuel cycle costs O&M costs Leadership on the org. of domestic nuclear industry International partnership Supplier country’s component industry Supplier country’s construction industry Supplier country’s nuclear fuel industry Supply chain localization in buyer’s country

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5. Technology Transfer

5.1 Knowledge sharing 5.2 Training of personnel 5.3 Bilateral R&D cooperation

5.1.1 5.1.2 5.2.1 5.2.2 5.3.1 5.3.2

Quality of knowledge Supplier country’s initiative to share technology Training of operation professionals Training of technical professionals Scale of bilateral R&D funding Scale of involved researchers

Under the Nuclear Technology criterion, Plant Design Technology, Plant Construction Technology, and Plant Operation Technology are assessed as tier 2 criteria.

First, the tier 2 criterion, Plant Design Technology, assesses general technical expertise and experience on the NPP design with tier 3 criteria addressing the specifics. The tier 3 criterion, Original Technology, evaluates the technologies necessary for NPP design - patents, codes, component design, etc. – possessed by the candidate supplier country. The tier 3 criterion, Demonstration of Reference Reactor, determines whether the reactor design for exportation is being constructed or being used in the supplier country. In addition, the criterion assesses proper construction and operation of any exported reactors. The tier 3 criterion, Nuclear Safety and Design Certification, evaluates the safety and licensibility of the NPP design. The specific design and especially the engineered safety features (ESF), which consists of containment systems, core cooling systems, habitability systems, and fission product removal and control systems, are classified information. Therefore, it is difficult to assess the superiority of the designs based on the plant description open to the public. In addition, each nation has different safety standards, making direct comparison and evaluation difficult. In this context, the Design Certification criterion may be the 11

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optimum means to objectively and accurately assess nuclear safety [11]. Design Certification refers to a system in which an independent regulatory agency evaluates the overall standard plant design without consideration for the plant site characteristics. The Nuclear Regulatory Commission-Design Certification (NRC-DC) of the United States and the European Utility Requirements (EUR) of Europe are Design Certifications that are widely accepted in the world nuclear power market. As such, global nuclear plant exporters strive to receive both certifications to certify the safety of their NPPs. Therefore, in tier 3 criterion, Nuclear Safety and Design Certification, the plant mode is evaluated for NRC-DC and EUR certification (if the certification process is ongoing, the completed safety review phase is considered).

Moving onto the second tier 2 criterion under Nuclear Technology, Plant Construction Technology evaluates the general technological expertise and experience in NPP construction. The tier 3 criterion, Designed Construction Period, takes into account the reactor construction time and the tier 3 criterion, Punctuality of Construction Schedule, evaluates how close the actual construction schedule was to the designed construction period based on past projects. The tier 3 criterion, Quality Assurance and Control, assesses how well the quality of constructed plants or manufactured components is guaranteed and controlled compared to their original designed quality.

The last tier 2 criterion, Plant Operation Technology, evaluates general technological expertise and experience in NPP operation. Under Plant Operation Technology, the tier 3 criterion, History of

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Plant Availability, assesses the plant operation skill and know-how and is based on NPP operation statistics and emergency shutdown records over the past decade. The tier 3 criterion, Plant Maintenance, was assessed based on the opinions of professionals on the speed and reliability of NPP maintenance and on Lost Time Injury Frequency Rates (LTIFRs).

In the Nuclear Fuel Cycle tier 1 criterion, Front-end Fuel Cycle Service and Back-end Fuel Cycle Service are evaluated as the tier 2 criteria.

The tier 2 criterion Front-end Fuel Cycle Service evaluates the overall ability to procure uranium, enrich uranium, and provide nuclear fuel. Specific tier 3 criteria are set as follows. The tier 3 criterion Capability of Uranium Procurement considers the domestic uranium procurement and security of the international uranium supply. The tier 3 criterion Capability of Uranium Enrichment evaluates the infrastructure for enrichment and the existence of any diplomatic uranium enrichment restrictions.

The Tier 2 criterion Back-end Fuel Cycle Service evaluates the availability of support or options from the supplier country after choosing the once-through cycle or closed fuel cycle. To further evaluate the Back-end Fuel Cycle Service, Availability of Reprocessing Service, Support of Final Waste Disposal, and Availability of Leaseback Option were set as tier 3 criteria. Availability of Reprocessing Service considers the possibility of the supplier country carrying out reprocessing instead of the import country. Special considerations are made regarding the existence of diplomatic restrictions

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or reprocessing infrastructure and the likelihood of offering reprocess service. Support of Final Waste Disposal evaluates the supplier country‘s technological expertise and experience with final nuclear waste disposal. Lastly, Availability of Leaseback Option assesses the availability of a leaseback option where the supplier country processes the import country’s nuclear fuel after use.

Governmental Support is a tier 1 criterion that focuses on Political Support, Financial Support, and Diplomatic Negotiation Power.

First, the tier 2 criterion Political Support evaluates the government policies supporting its own NPP export. Nuclear Industry Promotion by Government, the tier 3 criterion under Political Support, assesses the government’s economic and political support for nuclear related companies involved in utilities, NPP design, NPP construction, component supply, and maintenance. The Power of Government Organization for Nuclear Export tier 3 criterion deals with the amount of influence and export drive of the nuclear export organization within the supplier country. In Nuclear R&D Support by Government, the magnitude of domestic R&D funding and policies by the supplier country is evaluated. Probability for continuation of the supplier country nuclear program and nuclear program advocacy levels is respectively examined in Sustainability of Domestic Nuclear Industry tier 3 criterion.

Second, the tier 2 criterion Financial Support considers the financial support on the part of the supplier country and is evaluated by the Scale of Available Export Credit Agencies (ECAs) and

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Financial Package [12]. The tier 3 criterion Scale of Available ECA checks access to the ECA and investment funding made available by the ECA, which guarantees long term project investment. The ECA provides a guaranteed mortgage covering the default risk of the import country, which may occur in international investment. Official ECAs were evaluated: The Export-Import Bank of Korea (KEXIM), COFACE from France, Japan Bank for International Cooperation (JBIC), Export-Import Bank of China (EXIM China), Export Insurance Agency of Russia (EXIAR), and Export-Import Bank of the United States (EXIM-US) [13-15]. Moreover, the tier 3 criterion Financial Package considers the minimum interest rate for the import country with respect to the commercial interest reference rate (CIRR) and the monetary policy rate (MPR).

Last, the tier 2 criterion Diplomatic Negotiation Power considers the possible package deal offered by the supplier country and diplomatic negotiation ability. The Economic Package and Military Package are specifically considered as tier 3 criteria, which reflect the economic and military support or ventures that could be offered by the supplier country.

The fourth tier 1 criterion Commercial Capability evaluates three tier 2 criteria: Costs, Organization of Consortium, and Supply Chain.

First, Costs evaluates the cost competitiveness of nuclear export. The tier 3 criterion Total Capital Investment Costs (TCIC) is defined as the sum of design, licensing, manufacturing, erection, construction, commissioning, and other aspects of the NPP with respect to unit cost of construction.

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Nuclear Fuel Cycle Cost is also considered based on the cost of the nuclear fuel cycle and especially the cost of nuclear fuel. O&M costs include labor costs and other miscellaneous costs involved in operation and maintenance of the NPP.

The second tier 2 criterion Organization of Consortium evaluates the competitiveness and field of expertise of the consortium and is evaluated based on Leadership on the Organization of Domestic Nuclear Industry and International Partnership. Leadership on the Organization of Domestic Nuclear Industry considers the leadership of the head company of the consortium and the field of business of the consortium. International Partnership assesses the ability of the supplier country to collaborate and partner with other countries to enhance its competitiveness based on past contract cases.

The third tier 2 criterion Supply Chain evaluates the competitiveness of the companies included in the consortium based on the competitiveness of the domestic Component Industry, Construction Industry, and Nuclear Fuel Industry as well as by evaluating the Supply Chain Localization in the Buyer’s Country, which is fast becoming a key requirement for import countries.

In the Technology Transfer tier 1 criterion, Knowledge Sharing, Training of Personnel, and Bilateral R&D Cooperation are evaluated as tier 2 criteria. First, Knowledge Sharing deals with the Quality of Knowledge and the Supplier Country’s Initiative to Share Technology based on the subjective opinions of experts. Second, Training of Personnel considers the Training of Operation Professionals

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in the import country conducted by the supplier country and Training of Technical Professionals. Lastly, Bilateral R&D Cooperation considers the Scale of Bilateral R&D Funding and Scale of Involved Researchers of both supplier and import countries.

3.2 AHP Analysis Method and Weighted Value Analysis

In this study, a Multi Criteria Decision Making (MCDM) method was used to evaluate the NPP export competitiveness of the respective countries. There are many methods under MCDM, such as, ANP, MAUT, AHP, etc. Multi Attribute Utility Theory (MAUT) is useful for gaining insight into a complex decision making process, but it is difficult to verify the consistency of the utility function. In addition, the Analytic Network Process (ANP) has the advantage of being able to derive a more realistic result by considering the interactions or dependencies that exist between elements that make up the hierarchy. That is, the ANP method considers the interactions between the criteria and the alternatives that affect the feedback structure, thereby yielding a more realistic result. However, the effect of Cycle and Loop was insignificant in this study. Therefore, we chose the AHP, which is a derivation of ANP without Cycle and Loop consideration, for this study. The AHP is more advantageous in this context compared to other methods as it is a vertically developed structure that is more intuitive, easy to use, and used in a wide range of contexts.

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An AHP Analysis was used to compare the weighted values of each criterion. The AHP Analysis was developed by T.L. Saaty (1971) as a decision making method to be used when a variety of evaluation standards need to be considered [16]. The method allows for subjective decision making and can simultaneously consider multiple standards. Therefore, the AHP analysis is capable of evaluating complex issues that are difficult to quantify. The AHP analysis is a hierarchical process that performs a pairwise comparison of all evaluation standards, as shown in Fig. 2.

[Fig. 2. The Process of AHP Method]

We conducted a pairwise comparison based on the criteria shown in Table 2. The pairwise comparison denotes the relative importance between i and j criteria with the matrix element aij. When the importance of i is equal to j, aij has a value of 1, and when i is more important aij has a value greater than 1, and i has a value smaller than 1 when j is more important. In addition, the

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value of aij is set to 3 when i is slightly more important than j, 5 when i is more important than j, 7 when i is significantly more important than j, and 9 when i is vastly more important than j. The relationship between the value of the pairwise comparison matrix element and evaluation weight factor is as follows.

•

𝐴 = (𝑎𝑖𝑗) ; Pairwise comparison matrix (𝑨)

•

𝑎𝑖𝑗 = 1 (𝑖 = 𝑗), 𝑎𝑖𝑗 = 𝑎 (𝑖 ≠ 𝑗)

•

Perfectly consistent evaluation case, (subjective decision = actual importance)

1

𝑗𝑖

(

)



𝑤1/𝑤1 𝑤1/𝑤2 ⋯ 𝑤2/𝑤1 𝑤2/𝑤2 ⋯ 𝐴= ⋮ ⋮ ⋱ 𝑤𝑛/𝑤1 𝑤𝑛/𝑤2 ⋯

𝑤1/𝑤𝑛 𝑤2/𝑤𝑛 ⋮ 𝑤𝑛/𝑤𝑛



𝑎𝑖𝑗 = 𝑤



𝑤 = (𝑤1,𝑤2,⋯,𝑤𝑛) : weight factor

𝑤𝑖 𝑗

𝑡

There exists a difference eij from the actual importance value when the pairwise comparison is subjectively performed. In the AHP analysis for this study, a logarithmic least square method was applied to minimize the difference between the actual importance and the pairwise comparison. The pairwise comparison calculation comparing importance between criteria is as follows.

𝒘𝒊



Practical subjective decision case: 𝒂𝒊𝒋 = 𝒘 𝒆𝒊𝒋



𝒍𝒐𝒈 𝒂𝒊𝒋 = 𝒍𝒐𝒈 𝒘𝒊 ‒ 𝒍𝒐𝒈 𝒘𝒋 + 𝒍𝒐𝒈 𝒆𝒊𝒋



𝒎𝒊𝒏 ∑𝒊,𝒋 = 𝟏(𝒍𝒐𝒈 𝒘𝒊 ‒ 𝒍𝒐𝒈 𝒘𝒋 + 𝒍𝒐𝒈 𝒆𝒊𝒋) , ∑𝒊 = 𝟏(𝒍𝒐𝒈 𝒘𝒊) = 𝟎

𝒋

𝒏

𝟐

19

𝒏

( 𝒆𝒊𝒋 : error)

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∴ 𝒘𝒊 =

(∏

𝒏 𝒋=𝟏

𝒂𝒊𝒋

)

𝟏/𝒏

The weight factor calculation results on each tier 3 criterion are shown in Table 3. The relative importance of the criteria changes with respect to the import country’s stance. There are criteria that all potential NPP import countries consider important while there are some criteria that are considered only by some selected countries. Criteria that reflect the uniqueness of the country are denoted with an asterisk in Table 3. All NPP import countries were assumed to require all the criteria listed in Table 2 and have no diplomatic preference on specific supplier countries when the weighted factors were analyzed.

[Table 3. Weighted Values for NPP Export Competitiveness Comparison] Criteria 1. Nuclear Technology 1.1 Plant design technology 1.1.1 Original technology 1.1.2 Demonstration of reference reactors 1.1.3 Nuclear safety and design certification

1.2 Plant construction technology 1.2.1 Designed construction period 1.2.2 Punctuality of construction schedule 1.2.3 Quality assurance and control

1.3 Plant operation technology 1.3.1 History of plant availability 1.3.2 Plant maintenance

2. Nuclear Fuel Cycle* 2.1 Front-end fuel cycle service* 2.1.1 Capability of uranium procurement* 2.1.2 Capability of uranium enrichment* 2.1.3 Fuel fabrication and supply*

2.2 Back-end fuel cycle service* 2.2.1 Availability of reprocessing service* 2.2.2 Support of final waste disposal* 2.2.3 Availability of leaseback option*

3. Governmental Support 3.1 Political support 20

Weighted value 0.2254 0.1436 0.0157 0.0835 0.0444 0.0582 0.0162 0.0378 0.0042 0.0236 0.0197 0.0039 0.0815 0.0680 0.0272 0.0272 0.0136 0.0136 0.0058 0.0019 0.0058 0.3860 0.1231

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3.1.1 Nuclear industry promotion by government 3.1.2 Power of government org. for nuclear export 3.1.3 Nuclear R&D support by government 3.1.4 Sustainability of domestic nuclear industry

3.2 Financial support 3.2.1 Scale of available ECAs 3.2.2 Financing package

3.3 Diplomatic negotiation power* 3.3.1 Economic package* 3.3.2 Military package*

4. Commercial Capability 4.1 Costs 4.1.1 TCIC (Total Capital Investment Costs) 4.1.2 Nuclear fuel cycle costs 4.1.3 O&M costs

4.2 Organization of consortium 4.2.1 Leadership on the org. of domestic nuclear industry 4.2.2 International partnership

4.3 Supply chain 4.3.1 Supplier country’s component industry 4.3.2 Supplier country’s construction industry 4.3.3 Supplier country’s nuclear fuel industry 4.3.4 Supply chain localization in buyer’s country*

5. Technology Transfer 5.1 Knowledge sharing 5.1.1 Quality of knowledge 5.1.2 Supplier country’s initiative to share technology

5.2 Training of personnel 5.2.1 Training of operation professionals 5.2.2 Training of technical professionals

5.3 Bilateral R&D cooperation 5.3.1 Scale of bilateral R&D funding 5.3.2 Scale of involved researchers * Criteria that need to reflect the uniqueness of specific country

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0.0194 0.0281 0.0085 0.0671 0.1775 0.0444 0.1332 0.0854 0.0711 0.0142 0.2254 0.1217 0.0775 0.0314 0.0127 0.0368 0.0123 0.0246 0.0669 0.0176 0.0094 0.0094 0.0305 0.0815 0.0455 0.0114 0.0342 0.0261 0.0174 0.0087 0.0099 0.0075 0.0025

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[Fig. 3. Weighted Values of Tier 2 Criteria for NPP Export Competitiveness Comparison]

The weighted value analysis results of Table 3 were organized in the order of the tier 2 criteria importance in Fig. 3. With respect to NPP export competitiveness, the Financial Support of the government was found to have the greatest weight. The second most important criterion was found to be Plant Design Technology. Overall, criteria dealing with government support were found to carry the greatest weight. The weighted values of the importance of tier 3 criteria are shown in Fig. 4.

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[Fig. 4. Weighted Values of Tier 3 Criteria for NPP Export Competitiveness Comparison

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In the AHP analysis, it is necessary to evaluate the presence of any logical contradictions on the part of the evaluating experts. In this study, we used a Consistency Index (CI) to assess the consistency of the results. The CI had a value between 0 and 1 and generally with a CI value of less than or equal to 0.1, the pairwise comparison results can be regarded as consistent [17]. After the consistency evaluation, the greatest Consistency Index value was 0.0821, which shows that the pairwise comparison was consistent. Therefore, it is clear that the criteria in Table 3 provide an effective, consistent model proposed by experts that allows comparison between NPP supplier countries.

4. Implications of Model and Comparison of NPP Export Competitiveness among Six Nations

Based on the developed NPP export competitiveness comparison model and the analyzed weighted values, the competitiveness of the six NPP supplier countries Korea, France, Japan, China, Russia, and the United States was compared. The Delphi method was used to calculate the NPP export competitiveness for the comparison. The relative export competitiveness based on the Delphi method on the tier 1 criteria is organized in Fig. 5.

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[Fig. 5. Relative Competitiveness for each Evaluation Field among Six Countries]

4.1 Comparison of Nuclear Technology Competitiveness

As shown in Fig. 5, Korea exhibited the highest competitiveness in the tier 1 criteria Nuclear Technology. As per the above weight value analysis, countries with high Nuclear Technology Competitiveness are likely to demonstrate competitiveness in Plant Design Technology in tier 2 and Demonstration of Reference Reactor and Reliability, Nuclear Safety and Design Certification, and Punctuality of Construction Schedule tier 3 criteria. The assessment of Nuclear Safety and Design Certification was conducted based on the main export reactor type for each country: We considered 25

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the APR1400 (Advanced Power Reactor 1400) from Korea, the EPR (European Pressurized Reactor) from France, ATMEA-11 from Japan, HPR1000 (Hualong Pressurized Reactor 1000) from China, VVER1200 (Water-Water Energetic Reactor 1200) model V-392M and V-491 from Russia, and AP1000 (Advanced Passive 1000) from the United States [1]. These plant models are part of the 3rd generation NPP that demonstrate economic feasibility and safety. The plant descriptions of the NPPs are shown in Table 4. A comparison of tier 3 criteria of Nuclear Technology between six countries is shown in Fig. 6.

[Table 4. Main Export Reactor Model Description]

Reactor model Nationality Developer Reactor type Capacity (Gross, MWe)

1

APR1400

EPR

ATMEA-1

HPR1000

VVER-1200

AP1000

Korea KHNP

France AREVAEDF PWR 1750

Japan AREVA & Mitsubishi PWR 1150

China CNNC & CGN PWR 1170

Russia OKB Gidropress PWR 1180-1200

USA Westinghous e PWR 1250

PWR 1455

ATMEA is a joint venture between Mitsubishi Heavy Industries(MHI) and Électricité de

France(EDF) Group. ATMEA-1 is a pressurized water reactor(PWR), the result of a collaboration between MHI and AREVA-EDF. 2

SIS: Safety Injection System

3

CSS: Containment Spray System

4

RHRS: Residual Heat Removal System

5

AFWS: Auxiliary Feedwater System

6

PAR: Passive Autocatalytic Hydrogen Recombiner

7

IVR-ERVC: In-vessel Retention - External Reactor Vessel Cooling 26

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Design Life (years) Safety Features

60

60

60

60

60

60

• Active systems (SIS2, CSS3, RHRS4, AFWS5) • Passive systems (SIS, PAR6) • IVR-ERVC7 • Double containment* • Core catcher*

• Active systems (SIS, CSS, RHRS, AFWS) • Passive systems (CFVS8, PAR) • Double containment • Core catcher

• Active systems (SIS, CSS, RHRS, AFWS) • Passive systems (SIS, PAR) • Core catcher

• Active systems (SIS, CSS, RHRS, AFWS) • Passive systems (SIS, PCCS9, PRS10, PAR) • Double containment • Cavity Injection

• Active systems (SIS, CSS, RHRS, AFWS) • Passive systems (PCCS, PSGCS11, PAR) • Double containment • Core catcher

• Passive systems (SIS, PCCS, RHRS, PAR) • IVR-ERVC

* Installed in EU-APR1400

In Original Technology criteria, the United States and Russia demonstrated high competitiveness due to their respective history in nuclear technology, while China, which is a relative newcomer, demonstrated the lowest relative competitiveness. However, each NPP supplier country has unique technologies and it is difficult for the NPP importing country to determine superiority. Therefore, the difference in Original Technology competitiveness was considered as minimal between the six countries.

Demonstration of Reference Reactor and Reliability is an important measure of the reliability of the design technology of the NPP supplier country. Korea has one APR1400 reactor in operation with another five reactors under construction domestically and an additional four reactors under

8

CFVS: Containment Filtered Venting System

9

PCCS: Passive Containment Cooling System

10

PRS: Passive Secondary Side Heat Removal System

11

PSGCS: Passive Steam Generator Cooling System 27

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construction in the UAE [1]. Among these, the Barakah 1 reactor was completed in March of 2018 and has received the highest evaluation among all supplier countries. The next most highly evaluated country, Russia, has six VVER-1200 model (V-491, V-392M) reactors under construction domestically and two reactors in Belarus are under construction and a further nine reactors are in the planning stage for Egypt, Hungary, Finland, and Turkey [18, 19]. Additionally, two VVER100 reactors are under construction in China and an additional six VVER100 reactors in Bangladesh, India, and Jordan. Japan received the lowest evaluation; although four ATMEA-1 model reactors have been exported to the Sinop site in Turkey, construction has yet begun.

The United States’ AP1000 received the highest score in the Nuclear Safety and Design Certification criterion as it received domestic NRC design certification and EUR design certification in May 2007. The second highest score was received by APR1400, which received EUR design certification in November 2017 and is expecting to complete the last review phase of NRC design certification in September 2018. France and Japan received EUR design certification but received lower scores as each stopped or postponed NRC design certification at the fourth and second review phase, respectively. Russia received EUR design certification but does not have plans to receive NRC design certification. Lastly, China is in preparation to apply for design certification, but because there are no tangible results thus far, received the lowest score.

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In the Designed Construction Period criterion, AP1000 was the highest evaluated reactor with the shortest designed construction period, 42 months [1]. The proposed construction period in increasing order is Korea’s APR1400 (47 months), France’s EPR (48 months), Japan’s ATMEA-1 (48 months), China’s HPR1000 (50 months), and Russia’s VVER-1200 (54 months).

Korea received the highest score in the Punctuality of Construction Schedule criterion [1]. The APR1400 reactor was constructed domestically with limited construction extension. In addition, construction of the NPP exported to the UAE is expected to be completed in early 2018 and will be the first 3rd generation NPP to be constructed in the world. The next highest was China, which is in the process of constructing numerous domestic NPPs. In contrast, Russia received the lowest score as construction has yet to begin in numerous NPPs even after striking NPP export contracts. France received a low score because of excessive delays in NPP construction for Finland’s Olkiluoto 3 and United Kingdom’s Hinkley Point C [20].

The United States, with a history of 90% NPP use and infrequent NPP emergency shutdowns, was rated highest in History of Plant Availability criteria. Korea and France followed closely behind, while Japan, which showed low NPP use in the past and had completely halted NPP operation after the Fukushima disaster, received the lowest score. In Plant Maintenance, Korea, France, and the United States all received the highest score, while Japan, also because of the Fukushima disaster, received the lowest score.

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From the evaluation of the criteria and weighted values under Nuclear Technology, Korea was found to have the highest competitiveness in this criterion [21]. In particular, Korea received high scores in Demonstration of Reference Reactor, which is a key criterion in Nuclear Technology evaluation, Nuclear Safety and Design Certification, and Punctuality of Construction Schedule. Results indicate that Korea’s Nuclear Technology demonstrates high reliability based on past records and the nation is actively directing its efforts for NPP export, as evidenced by the Nuclear Safety and Design Certification criterion. Korea was followed by the United States, Russia, China, France, and Japan. The evaluation results of Nuclear Safety and Design Certification reflects not only the maturity of each country’s Nuclear Technology but also the globally qualified safety standards of NPP design, construction, and operation to date.

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[Fig. 6. Comparison of Nuclear Technology between NPP Supplier Countries]

4.2 Comparison of Nuclear Fuel Cycle Competitiveness

The comparison of Nuclear Fuel Cycle competitiveness highlighted that Russia has the highest competitiveness. Again, based on the weighted value analysis, the countries with the highest evaluation score on tier 2 criterion Front-end Fuel Cycle Service and on tier 3 criteria Capability of Uranium Procurement and Capability of Uranium Enrichment are likely to have high Nuclear Fuel Cycle competitiveness. In the Nuclear Fuel Cycle criterion, the fuel cycle service that can be diplomatically or politically provided by each country was also considered in addition to technological superiority. The relative comparison of tier 3 criteria in Nuclear Fuel Cycle criterion is shown in Fig. 7.

Russia received the highest score in Capability of Uranium Procurement as it has multiple uranium deposits that make the country self-sufficient. Similarly, China and the United States received high scores due to their domestic uranium mines and a myriad of uranium sources, respectively. By contrast, Korea and Japan, which rely completely on uranium import, received the lowest scores [22]. Regarding Capability of Uranium Enrichment, France, China, Russia, and the United States do not have any diplomatic regulations on uranium enrichment and therefore received the highest evaluation. Due to the Nuclear Agreement with the United States, Korea and Japan require 31

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permission for Uranium Enrichment and do not have enrichment facilities and consequently received the lowest scores. In terms of Fuel Fabrication and Supply, however, all countries were evaluated to have the same competitiveness as all six countries have the technological means to manufacture nuclear fuel and are doing so to supply their respective NPPs.

In Availability of Reprocessing Service criterion, France, Japan, China, and Russia, which have established a closed fuel cycle, were evaluated as having the highest competitiveness. The United States has the technological capabilities and facilities to establish a closed fuel cycle but was evaluated lower due to its reluctance in offering reprocess service to other countries. Korea cannot undertake reprocessing of nuclear fuel after use due to political and diplomatic reasons and therefore received the lowest score [23]. All six countries received the same scores in the Support of Final Waste Disposal criterion as none of the countries have official records of final waste disposal. In Availability of Leaseback Option, Russia received the highest score as it is the only country to offer a leaseback option for the nuclear fuel from exported NPP.

Evaluation of Nuclear Fuel Cycle criteria and consideration of weighted values indicated that Russia has the highest competitiveness. Russia received the highest scores for Capability of Uranium Procurement and Capability of Uranium Enrichment. In addition, Russia provided various options in the Back-end Fuel Cycle criterion to give it a special edge over the other countries. After Russia, China, the United States, France, Japan, and Korea were found to have competitiveness in decreasing

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order. The results clearly portray the political and diplomatic constraints imposed on Korea regarding the nuclear fuel cycle criterion.

[Fig. 7. Comparison of Nuclear Fuel Cycle between NPP Supplier Countries]

4.3 Comparison of Governmental Support Competitiveness

The Tier 1 criterion Governmental Support showed that China has the highest competitiveness. Similarly, the weighted value analysis indicated that Financial Support in tier 2 and Financial Package, Sustainability of Domestic Nuclear Industry, and Economic Package in tier 3 are important criteria. The government’s capability, willingness to provide support, and the domestic political situation

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were also considered [24]. A comparison between tier 3 criteria for the six countries is shown in Fig. 8.

In Nuclear Industry Promotion by Government, Power of Government Organization for Nuclear Export, and Nuclear R&D Supports by Government, China and Russia showed the highest competitiveness. In both China and Russia, nuclear power is considered a key national industry and is provided with vast funds and supported with policies [25]. In addition, Russia’s NPP export consortium Rosatom and China’s NPP export consortium CGN are government institutes that receive extensive government support. By contrast, Korea’s government support is weakening due to the denuclearization stance of the current government and decreasing influence of national NPP export institutes. The United States has a similar story of decreasing government support due to a decrease in domestic competitiveness.

China and Russia were also highly evaluated in Sustainability of Domestic Nuclear Industry [22, 26]. Both countries are continuing NPP construction domestically and show no signs of slowing down. By contrast, France has declared that it will reduce reliance on nuclear power, and the continuation of nuclear power is uncertain in the United States due to the decrease in competitiveness compared to other power generation industries. Korea and Japan both suffer from an unfavorable stance of their governments and a worsening attitude towards nuclear power [27].

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China was again evaluated with the highest competitiveness in Scale of Available ECAs. China’s official ECA, Export-Import Bank of China, had $504.4 billion available in 2016 as written in the Export-Import Bank of China Annual Report for 2016, which is the largest available sum amongst the six countries. Japan’s official ECA, Japan Bank for International Cooperation (JBIC), has $156.3 billion available as written in the JBIC Annual Report 2016. By contrast, the United States’ EXIM US and COFACE have limited ECA funds available and have to request private banks to guarantee NPP investment. Russia has the least amount - $54.3 billion - available as official national ECA, and therefore received the lowest evaluation as written in the EXIAR Annual Report 2015.

In the Financial Package criterion, China again demonstrated the highest competitiveness. China can delve into the government’s massive foreign currency reserve to offer government support. It is also a non-OECD member and therefore does not have to abide by the OECD’s Commercial Interest Reference Rate and can offer the NPP import country a financial package with the low interest rates. Russia also benefits from the same advantages of being able to rely on government support and non-OECD member status. By contrast, OECD members Korea, France, Japan, and the United States have to abide by the minimum interest rate. In particular, Korean banks do not provide large sums of dollars due to foreign currency exchange trauma as well as having relatively small dollar reserves. Korea also suffers from a disadvantageous financing rate of interest because the Korean Won is not a major world currency.

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Again, China and Russia received the highest evaluation in the Economic Package criterion because both countries can offer a variety of economic packages with the support of their governments. By contrast, Korea scored low due to the lack of competitiveness and inability to actively carry out economic negotiations. The United States scored highest in the Military Package criterion as it demonstrates great military influence over non-Communist countries. It can also offer national defense technologies as part of the economic package. Russia followed closely as it can also offer a substantial military package but was evaluated lower than the United States, as nonCommunist countries and countries in conflict with Russia refrain from dealing with Russia. Japan received the lowest evaluation score due to international restrictions that prevent Japan from engaging in military cooperation.

Based on the evaluation of Governmental Support and weighted values, China was found to have the highest competitiveness. China showed high competitiveness in Financial Package, Sustainability of Domestic Nuclear Industry, and Economic Package criteria, which are crucial criteria in Governmental Support. Russia followed closely, which reflects the efforts on the part of the Chinese and Russian governments to actively export NPPs. By contrast, Korea, France, Japan, and the United States fell short due to the decrease in nuclear favorability and passive government stance and policies. Governmental Support was highest for China, followed by Russia, Japan, the United States, France, and Korea in decreasing order.

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[Fig. 8. Comparison of Governmental Supports between NPP Supplier Countries]

4.4 Comparison of Commercial Capability Competitiveness

Korea showed the highest competitiveness in the tier 1 criterion Commercial Capability, while the tier 2 criterion Costs and tier 3 criteria TCIC and Supply Chain Localization in Buyer’s Country were analyzed to be important. Comparison between the six countries on tier 3 criteria under Commercial Capability is organized in Fig. 9.

In the tier 2 Cost criterion, Korea received the highest evaluation. The overnight costs for each exported reactor were referred to for cost comparison (IEA and OECD/NEA, 2010). Each country’s overnight costs per reactor from the lowest cost order are Korea (1556$/kWe), China (1763$/kWe), 37

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Russia (2993$/kWe), Japan (3009$/kWe), the United States (3382$/kWe), and France (3860$/kWe). The NPP contract cost is classified but it is expected to be similar to the overnight costs.

China showed the highest competitiveness in criterion Operation & Management Costs due to the economy of scale it has developed domestically with many NPPs in operation and low labor costs in China. It was followed by Russia and Korea, which received relatively high evaluation scores with France and the United States receiving the lowest scores.

The six countries did not show any notable differences in Leadership on the Organization of Domestic Nuclear Industry criterion. All consortiums demonstrated competitiveness in all aspects of the business and have experience in NPP export.

Japan and the United States received the highest scores in the International Partnership criterion. Japan and the United States have experience in forming international joint ventures between GEHitachi and WES-Toshiba. By contrast, France and Russia have no record of forming international partnerships and received the lowest scores.

In terms of the supplier country’s Component Industry, Construction Industry, and Nuclear Fuel Industry, China was rated the highest. China already has in place a domestic nuclear supply chain that already supplies numerous domestic NPPs. Korea and Russia also received high scores while the United States received the lowest score due to its decaying domestic nuclear industry.

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The United States received the highest evaluation in the Supply Chain Localization in Buyer’s Country criterion. To compensate for the decaying domestic supply chain, the United States forms international partnerships or uses local supply chains. By contrast, China received low scores as it refrains from allowing foreign companies to participate in the supply chain.

Based on the evaluation criteria and weight value analysis of Commercial Capability, Korea was evaluated as having the highest competitiveness. Korea showed exceptional competitiveness in Cost Competitiveness and especially in TCIC, and therefore has the capability to provide attractive business content for import countries. China also demonstrated Commercial Capability levels similar to Korea. China offers low NPP construction costs, with only Korea having lower costs, and has a highly competitive supply chain based on its domestic NPP industry. The evaluation shows Korea has the highest Commercial Capability, followed by China, Russia, Japan, the United States, and France in decreasing order.

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[Fig. 9. Comparison of Commercial Capability between NPP Supplier Countries]

4.5 Comparison of Technology Transfer Competitiveness

In the tier 1 criterion Technology Transfer, Russia showed the highest competitiveness. Knowledge Sharing in tier 2 and Supplier Country’s Initiative to Share Technology and Training of Operation Professionals in tier 3 were considered important based on the weighted value analysis. Technology Transfer evaluation was limited to evaluating the technology and operation professional training provided by the supplier country for the import country. Fig. 10 shows the relative comparison of tier 3 criteria under Technology Transfer criteria.

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The traditional nuclear power houses, Russia and the United States, received the highest scores in the Quality of Knowledge criterion. Russia scored highest again in Supplier Country’s Initiative to Share Technology by providing active support in technology transfer. Russia is also in the midst of large-scale NPP operation and is training operation professionals abroad as well as participating in co-R&D ventures under the government’s initiative.

In the last tier 1 criterion Technology Transfer, Russia again showed significantly higher competitiveness. Even disregarding the most important Supplier Country’s Initiative to Share Technology and Training of Operation Professionals, Russia received the highest score. The reason for the high score lies in Russia’s favorable stance toward technology transfer to other countries and its not having diplomatic restraints such as those faced by Korea and Japan. In addition, Russia invests a significantly greater amount of finance and manpower in training operation professionals abroad. The results show competitiveness in decreasing order as follows: Russia, Korea, China, France, Japan, and the United States.

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[Fig. 10. Comparison of Technology Transfer between NPP Supplier Countries]

4.6 Overall Results of NPP Export Competitiveness

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[Fig. 11. Overall Competitiveness of 6 Major NPP Supplier Countries]

Thus far, the competitiveness among the six countries for each criterion was ranked and analyzed. Based on the analysis, the overall competitiveness of six major NPP supplier countries can be deduced as shown in Fig. 11, which presents the overall NPP export competitiveness score of each country. China and Russia demonstrate the highest competitiveness, followed by Korea, the United States, Japan, and France in decreasing order. China, although a newcomer to the NPP market, has recently exported three NPPs to Pakistan and Argentina and is in the midst of constructing 22 more domestic NPPs. China is expected to become a strong player in the NPP market with its foundation on a large domestic market and strong government support. Russia is also a strong player, having exported to 10 different countries including Turkey over the past decade. In the near future, Russia is expected to compete with China. Between these strong players, Korea has succeeded in completing NPP construction on time, which is a rarity amongst supplier countries, and has high credibility due to the successful operation of domestic NPPs and the obtained design certifications. However, Korea has failed to add to its success and has repeatedly lost out to China and Russia over the past eight years. The reason is suspected to be the relative lack of financial capability and comprehensive support from the government. With such clear deficiencies, it seems difficult to beat the competition under limited NPP export opportunities. The United States was evaluated as having overall competitiveness similar to Korea. However, its competitiveness score is concentrated in Nuclear Technology and Nuclear Fuel Cycle, which makes independent NPP export difficult. Recently, 43

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the collapse of Westinghouse made NPP export even more difficult. Lastly, France and Japan received similar competitiveness scores and were placed in the lower bracket. Both countries experienced significant blows to their technological credibility due to France’s NPP construction delay as a result of technical issues on international sites and Japan’s Fukushima disaster. In addition, both countries are suffering from a decrease in domestic NPP reliance and government support. The restructuring of France’s AREVA and the collapse of Japan’s WEC-Toshiba makes commercialization even more difficult, making it unlikely that France or Japan will successfully export NPPs prior to solving these domestic issues.

5. Discussion

In a competitive and very limited market with a winner take all mantra, a tremendous amount of effort and investment is required to win. In such a harsh and competitive environment, will Korea succeed in exporting additional NPPs?

The answer can be found by observing the recent NPP export trends. First, Korea should target countries interested in NPP import that have strong leadership [1]. As the UAE case indicates, the political decision making of the NPP import country is an extremely important factor. France was primed to clinch an NPP contract with the UAE prior to the final decision. However, Korea overtook France and won the NPP contract after a meeting between the decision makers. NPP import is a 44

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project of gargantuan size, and therefore the final decision can be made by government leaders rather than through the bureaucratic system. Therefore, a marketing strategy targeting countries with strong political leadership must be adopted by Korea to compensate for the relative lack of financial support compared to China or Russia.

Second, Korea must develop a consumer oriented export package [1]. Offering programs or businesses that are unrelated to NPP projects must be included if the NPP import country expresses explicit interest. Korea may offer cooperation in fields of military, nuclear, and IT programs where it may have a comparative advantage. Korea is still in a standoff with North Korea and devotes 15% of its total GDP to military spending, and as a result has accrued relatively high technological expertise in military R&D. Therefore, it is possible to include military R&D technology or weaponry at discounted prices. In addition, Korea has relatively high competitiveness in the field of NPP technologies. Japan, the United States, and France lack nuclear R&D funding due to the occurrence of nuclear disasters, ongoing mergers, and such. Including nuclear technology transfer or offering cooperation in establishing a research institute may give an advantage to Korea. Lastly, Korea is arguably the world’s leader in IT, especially in the semi-conductor, mobile phone, and display industries. Including IT research centers or factories in the package may improve the economy of the NPP import country. Moreover, because the IT industry requires large amounts of electricity, the development of this industry in the import country may result in additional opportunities for NPP export. 45

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Third, Korea should target and strategically cooperate with countries that do not have to consider Korea’s weakness in nuclear fuel cycle or countries that can supplement Korea’s weak nuclear fuel cycle. Targeting countries that are less concerned with Korea’s relatively weak financial capabilities may be a solution. Therefore, rather than targeting developing countries, it may be more suitable for Korea to consider exporting to countrieswith a developed financial industry, such as the United Kingdom. In addition, Korea can solve its weakness in nuclear fuel cycle service through strategic cooperation with NPP import countries. For example, Australia does not operate NPPs but has one of the largest uranium reserves and has the potential to provide storage space for nuclear fuel after use. Therefore, Korea may find a solution to finding a reliable nuclear fuel supply and used nuclear fuel disposal by pursuing strategic cooperation with Australia. Australia already made a 123 Agreement with the United States, which will limit political issues that may arise from NPP export.

Fourth, Korea can emphasize and improve Korea’s best strength of being on time and on budget. Recently, worldwide interest in fine dust and CO2 emission control has increased. CO2 contributes to global warming while fine dust concerns the fundamental health rights of the public. To solve both issues, many countries are considering construction of NPPs. Therefore, developing marketing strategies targeting countries that require a quick solution to these two issues is a must for Korea. Unlike other supplier countries, Korea has demonstrated that it can complete NPP projects on time, as exemplified in the UAE. Therefore, Korea’s nuclear construction technology may be attractive to

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rapidly developing countries, such as India, China, or Vietnam, that are suffering from fine dust or CO2 emissions [28].

Fifth and last, Korea can target countries that refrain from adopting Chinese or Russian NPPs due to a close relationship with the United States. The United States makes 123 Agreements with NPP countries for worldwide denuclearization [23]. However, countries that have adopted Chinese or Russian NPPs do not have to make the 123 Agreement [26]. Therefore, pressure created on the United States when countries that have a close relationship with the United States adopt Chinese or Russian NPPs. The pressure arises from the possibility of using nuclear capability for military purposes, as in the cases of Pakistan, India, North Korea, and Iran [29-31]. The United States uses its political influence and tracks countries that adopt NPPs. Korea can use its better political proximity to the United States compared to Russia or China to target countries that maintain political proximity to the United States and are considering NPP import. Pro-American countries can reduce political friction with the United States by adopting Korean NPPs rather than Chinese or Russian NPPs.

.

6. Conclusion

We developed a framework to compare the export competitiveness of NPP supplier countries using an AHP analysis method. The AHP analysis and weighted value analysis revealed that the 47

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Financing Package, Demonstration of Reference Reactor, TCIC, Economic Package, and Sustainability of Domestic Nuclear Industry are the most important criteria to consider during NPP export. Based on the developed framework, the export competitiveness between the six supplier countries was evaluated. The results indicated that China, Russia, Korea, the United States, Japan, and France demonstrate export competitiveness in decreasing order. To improve its position, it is important for Korea to target countries with strong leadership that do not consider the nuclear fuel cycle, that require an NPP quickly, and that have a poor relationship with China or Russia while also developing consumer oriented export packages. In addition, the Korean government should consider providing financial support as a payment guarantee for NPP export at levels similar to those provided by competing countries such as China, Japan, and Russia. Lastly, Korean government support is critical to improving diplomatic negotiation ability in providing package deals and domestic NPP continuity, which have been revealed as weaknesses in Korea’s export competitiveness.

Acknowledgement

This research was supported by the KUSTAR-KAIST Institute, KAIST, Korea.

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