Czech state to back new nuclear units

09 July 2019

The Czech government has given preliminary approval for Elektrárna Dukovany II - a subsidiary of utility ČEZ - to build at least one new nuclear power unit. The decision was announced in a government resolution published yesterday by the Ministry of Industry and Trade.

Dukovany (Image: ČEZ)

The Czech Republic's state energy policy, approved by the country's cabinet in June 2015, foresees one new unit at Dukovany, and possibly three more at the Dukovany and Temelín sites. The cabinet at that time recommended that utility ČEZ, which owns and operates the country's two nuclear power plants at Dukovany and Temelín, should create a subsidiary company to prepare construction plans and explore options for financing the new reactors.

According to the resolution published yesterday, the government will provide ČEZ, which is 70% state-owned, with guarantees to help it secure cheaper financing. A decision on construction of a unit at the Dukovany site is still years away with suppliers expected to be chosen by 2024. First, one new reactor of at least 1200 MW would be built at the existing Dukovany site by around 2035, to replace the four units in operation there that are expected to be permanently shut down between 2035 and 2037. The government also expects to add new capacity at ČEZ's Temelín site at some point later.

The document states: "The investor of the construction will be Elektrárna Dukovany II, which is a 100% subsidiary of ČEZ. A contract will be concluded between the state and the ČEZ Group that will enable the company to obtain credit for the construction of new nuclear sources under the same conditions as if the state were borrowing the money. The state will also guarantee the stability of the legislative and regulatory environments and possible compensation for change. The state will not provide a return guarantee for a contract-for-difference (CfD) as it did the UK [government] for Hinkley Point. The investor model chosen is the basis for negotiations with the European Commission."

It adds that the decision to build new nuclear units will have a "major impact" on the country's ability to meet its emissions reduction commitments. It also says that: "Ministers perceive the construction of new nuclear sources as a precondition for ensuring secure supplies of electricity and energy self-sufficiency in the Czech Republic. Construction is an integral part of the basic security interests of states, where nuclear power plants are among the critical infrastructures in accordance with current legislation. As part of the preparation and implementation of the project for new nuclear sources, the selected investor model will provide for the basic security interests of the state."

Minister of Industry and Trade Karel Havlicek reportedly said at a press conference in Prague following a cabinet meeting that the government is "moving from the stage of talking about constructing new nuclear capacity to taking specific steps to prepare for new capacity". The UK's CfD model guarantees a minimum price for electricity produced, meaning that the Czech approach would be to pass the business risk of building new reactors on to the utility, Havlicek said.

The resolution says: "It will be necessary to discuss the chosen model with the EC in relation to the rules of the European Union's internal market. It will also be necessary to propose a business process to ensure the construction of a new nuclear source, so that the state can supervise its security interests at any time during its construction."

The government yesterday also approved an increased budget for the ministry to prepare for nuclear plant construction, including a team of advisors to its special envoy for nuclear energy, Jaroslav Míl, for the period 2019-2022. Míl’s advisory team will have five members, who are all "renowned experts" in the field of nuclear energy and construction. They are: Jan Vacík, Vojtěch Michalec, Jaromír Novák, Vladivoj Řezník and Jana Siegerová.

The resolution also says that, "as has been the case for similar projects in the UK, Hungary, Finland and other European countries", the "vast majority of spending" will be used to conclude contracts with "specialist entities", including legal, consultancy and auditing firms "with proven references" from nuclear power plant projects in Europe in recent years.

It notes the "important role" played by the fact that the country's prime minister - Andrej Babiš - has chaired the Standing Committee on Nuclear Energy since last year. The committee consists of representatives of all political parties and movements represented in the Chamber of Deputies. "Indeed, political consensus is essential to build new resources," it says.

The Czech Republic needs a new nuclear power plant, it says, to maintain its energy independence based on existing resources. As the older plant, Dukovany must be provided for before Temelín. “New Dukovany units should be replaced by new ones in about 20 to 30 years,” it says. “Regarding the project of new nuclear sources in the Temelín site, the government has decided on the basis of expert advice by the Standing Committee for the Construction of New Nuclear Resources in the Czech Republic to maintain it so that it can be activated at any time."

In approving the investor model, the government says it is fulfilling the task of the National Action Plan for the Development of Nuclear Energy in the Czech Republic.

"It is of course environmentally friendly [policy], because new nuclear power plants will be a low-emission, stable source of electricity and heat," the resolution says. "The construction contributes to the fulfilment of the State Energy Policy, which envisages increasing the share of nuclear energy in electricity production from the current 30% to 46% and then to 58%. There will be a gradual reduction in coal combustion, with regard to ecological protection and the depletion of mineral resources."

Researched and written by World Nuclear News