The Society of Naval Architects of Korea

SNAK NEWSLETTER	July, 2023
[Trends in the Shipbuilding Industry and R&BD] Korean Shipbuilders Expanding Offshore SMR Business

The domestic shipbuilding sector of Korea has embarked on the recent rapid growth of the offshore SMR (small modular reactor) market. Their main strategy is to develop offshore SMR as a new growth engine to timely respond to tightening environmental regulations worldwide and to align with the global trend of decarbonization. According to industry sources, local shipbuilders recently signed consecutive memorandum of understandings (MOU) related to offshore SMR with domestic and international energy companies. This is backed by the recent recognition of offshore SMR as a suitable alternative to decarbonization and a next-generation technology with massive growth potential. Offshore SMRs are small-scale nuclear power reactors with capacity of 500 MW or less, which has the advantage of operating in conjunction with other technologies for producing green energy, such as hydrogen or ammonia. Based on their stability, economic viability, and flexibility, offshore SMRs are considered to be the nuclear reactors that will lead the next-generation energy market. Three major shipbuilding companies of Korea (HD Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries, and Hanwha Ocean), actively engaged in responses to tighter environmental regulations, and have also decided to enter the offshore SMR market. Leveraging their capabilities built over so many years, these new entrants are expected to deliver tangible results in the SMR market. An industry official explained, "SMRs are called the ‘game-changers’ of the future energy sector as they can be installed without much restrictions in their surrounding environment and supply energy in a stable manner." He further explained that "the recently growing expectations around floating offshore power generation systems using SMRs is another reason for growing interest in SMRs." Some are advising Korean shipbuilders to proactively take leadership in the market. President Rhee Shin Hyung of the Society of Naval Architects of Korea pointed out, "while domestic shipbuilders have entered the market as they started to develop offshore SMRs, we still observe lack of significant movement regarding future fuels, such as nuclear or hydrogen power." He further advised, "for domestic shipbuilding companies to maintain their market dominance, they need to take proactive leadership in future fuels looking into the distant future in the next 20 to 30 years."

The domestic shipbuilding sector of Korea has embarked on the recent rapid growth of the offshore SMR (small modular reactor) market. Their main strategy is to develop offshore SMR as a new growth engine to timely respond to tightening environmental regulations worldwide and to align with the global trend of decarbonization.

According to industry sources, local shipbuilders recently signed consecutive memorandum of understandings (MOU) related to offshore SMR with domestic and international energy companies. This is backed by the recent recognition of offshore SMR as a suitable alternative to decarbonization and a next-generation technology with massive growth potential.

Offshore SMRs are small-scale nuclear power reactors with capacity of 500 MW or less, which has the advantage of operating in conjunction with other technologies for producing green energy, such as hydrogen or ammonia. Based on their stability, economic viability, and flexibility, offshore SMRs are considered to be the nuclear reactors that will lead the next-generation energy market.

Three major shipbuilding companies of Korea (HD Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries, and Hanwha Ocean), actively engaged in responses to tighter environmental regulations, and have also decided to enter the offshore SMR market. Leveraging their capabilities built over so many years, these new entrants are expected to deliver tangible results in the SMR market.

An industry official explained, "SMRs are called the ‘game-changers’ of the future energy sector as they can be installed without much restrictions in their surrounding environment and supply energy in a stable manner." He further explained that "the recently growing expectations around floating offshore power generation systems using SMRs is another reason for growing interest in SMRs."

Some are advising Korean shipbuilders to proactively take leadership in the market. President Rhee Shin Hyung of the Society of Naval Architects of Korea pointed out, "while domestic shipbuilders have entered the market as they started to develop offshore SMRs, we still observe lack of significant movement regarding future fuels, such as nuclear or hydrogen power." He further advised, "for domestic shipbuilding companies to maintain their market dominance, they need to take proactive leadership in future fuels looking into the distant future in the next 20 to 30 years."

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