Korea's $120bn US Reactor Plan Sits Behind a $20bn Annual Cap and a Statutory Viability Test
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Korea's plan for eight US reactors must fit within a legal $20bn-a-year investment ceiling and pass a commercial-reasonableness test, while sites, costs and contracts remain unsettled.
Eight reactors, two designs and a $120bn envelope
South Korea and the United States announced a framework on 1 October under which Korea would invest up to $120 billion in eight large nuclear reactors in the US [1][2]. The fleet comprises six Westinghouse AP1000 units and two Korean-designed APR1400 units [1][3]. ANS reports the APR1400s at 1,400 MWe each and the AP1000s at 1,110 MWe each [1]. The $120 billion is split into $100 billion for construction and $20 billion reserved for contingency [1][2].
The nuclear framework is one of three projects announced together, alongside a $22.3 billion gas-fired plant in Encinal, Texas and the Alaska LNG project, the last of which remains under review for commercial viability [2]. Sources describe the wider envelope in different terms: ANS places the nuclear component within a $200 billion investment, while NucNet describes a broader $350 billion package designed to secure US tariff exemptions for South Korea [1][3]. Korea's trade ministry describes the overall commitment as $200 billion of US investment plus a $150 billion shipbuilding cooperation package [4].
Commerce Secretary Howard Lutnick said during a 30 September briefing: "They're going to go across the United States. They are going in Ohio, they are going in Tennessee, they are going in South Carolina, and they are going in Kentucky." [1] Brookfield Asset Management stated that the AP1000s will be deployed as twin units on three federal sites and that the APR1400s will also be built on federal sites [1]. The two countries agreed to transfer a $10 billion advance payment by the end of the year to buy long-lead items, in accordance with applicable domestic legal requirements [1][2].
The annual cap and the commercial-reasonableness test
Korea's National Assembly passed the Special Act on the Korea–US strategic investment framework on 12 March 2026, according to the Ministry of Trade, Industry and Resources [4]. The ministry states that execution is "capped at USD 20 billion per year and executed in line with project progress" [4]. The Korea Times likewise reports a legal ceiling of $20 billion per year and $200 billion in total [2].
The act requires that investments "be carried out on a commercially reasonable basis and in a manner consistent with the national interest", with exceptions permitted only for national security or supply chain stability [4]. It sets a two-stage review, with a project management committee at the ministry assessing commercial viability and strategic considerations and an operating committee at the Korea–US Strategic Investment Corporation making final investment decisions [4]. The government must report to the National Assembly before consulting the United States [4].
An enforcement decree approved on 9 June defined commercial reasonableness as "a project whose expected revenue can recover all principal and interest on the investment" over the project's expected duration [5]. Interest is to be calculated using "the yield on 20-year U.S. Treasuries at the time of investment plus a spread agreed by the two countries" [5]. The act and the investment corporation took effect on 18 June [5]. Under the announced terms, profits are shared 5:5 until Korea recovers principal and interest on its overall investment, after which a 1:9 split applies [2]. Minister Kim Jung-kwan said: "While the (previous) memorandum of understanding was vague about risk pooling, we specified it this time." [2]
Seoul Economic Daily reports that the government plans to evaluate the commercial rationale of each reactor project before making final investment decisions [6]. On the figures published, the $120 billion nuclear component alone equals six years of disbursement at the $20 billion annual ceiling, which suggests the programme will be paced by the cap as well as by construction progress; this is an inference from the stated numbers rather than an official schedule [2][4].
How the $20bn cost-overrun cushion works
Kim presented the cost-overrun arrangement to the National Assembly's trade and industry committee on 22 September [6]. The $20 billion is set aside as a buffer against construction cost increases, and any unspent portion still counts toward Korea's investment commitment if the reactors are delivered on schedule and within budget [6]. Costs above $20 billion are to be allocated according to responsibility under contracts between the project operator and engineering, procurement and construction contractors, and Korea faces no automatic obligation to cover overruns beyond that sum [6].
Asked who would pay if costs exceeded $120 billion, Kim said: "It will be determined by who is at fault." [7] The Kyunghyang Shinmun characterised the answer as leaving the allocation of financial risk unclear [7].
Sites, contracts and ownership still to be settled
Specific construction timeframes and locations for the eight reactors have yet to be given [1]. Kim warned: "If the United States proposes building reactors in areas where construction is difficult or where access to cooling water is poor, the project cost could change, so careful review is needed." [7] Officials said discussions on finalising specific project details would continue through the fourth quarter, and the government is awaiting a concrete construction proposal from the United States [7].
The Korea Times reports that construction would begin with two AP1000 reactors, followed by two APR1400 and two AP1000 units, then a final two AP1000 units [2]. Korea may also take a 5–10 per cent cornerstone equity stake in Westinghouse through KEPCO and Korea Hydro & Nuclear Power [1]. The Kyunghyang Shinmun reports that economists regard 10 per cent as the minimum threshold for board participation [7]. If the APR1400s proceed, Korea would hold the first foreign reactor design to be built in the United States, the newspaper notes [7].
Korean industry has welcomed the plan, with KEPCO saying it "carries significant weight in that it lays out a concrete blueprint for Korea-U.S. cooperation in energy" [8]. Seoul Economic Daily reports that the US aims to break ground on at least 10 large reactors by 2030 [8]. Taken together, the sources indicate that the $120 billion figure is a ceiling rather than a committed spend: each reactor must still clear the statutory return test, committee approval and parliamentary reporting, and its draw on funds must fit within the annual cap [4][5][6].
Sources
[1] South Korea to invest in U.S. nuclear projects, including 8 large reactors — American Nuclear Society (Nuclear Newswire), 1 Oct 2026
[2] Korea, US unveil 3 investments in energy projects — The Korea Times, 1 Oct 2026
[3] South Korea Announces $120 Billion Plan For Eight Large-Scale Nuclear Power Plants In US — NucNet, 1 Oct 2026
[4] Korea's National Assembly Passes Special Act for Korea–U.S. Strategic Investment Management — Ministry of Trade, Industry and Resources, 16 Mar 2026
[5] Government sets criteria for assessing the ambiguous U.S. investment 'commercial reasonableness', full-scale U.S. investment expected to begin — The Kyunghyang Shinmun, 9 Jun 2026
[6] Korea Wins $20 Billion Cost-Overrun Cushion in U.S. Nuclear Deal — Seoul Economic Daily, 22 Sep 2026
[7] Nuclear power was the centerpiece of investment in the United States… Even with a bridgehead for entry into the largest nuclear market in the world, the United States, what challenges remain? — The Kyunghyang Shinmun, 1 Oct 2026
[8] U.S. Investment Plan Lifts Korean Nuclear, Plant Builders — Seoul Economic Daily, 4 Oct 2026