The Czech Republic’s new government has made one of its central promises to build new nuclear reactors. Most administrations have made similar pledges, but new ground has not been broken since 2004. Martin Sedlák asks: can the government succeed this time?
Nuclear Power Plants (Photo by Public Domain)
Atomic promises
The pledge to develop nuclear energy is not new and has been included in the energy policy of the Czech Republic ever since 2004. Almost all governments have de facto voted to do so, with the exception of the coalition government that included the Green Party.
The project of two new reactors at Temelín has even received a positive environmental impact assessment. From today’s perspective, that 10-year-old assessment is greatly out of date. It includes the claim that “in a nuclear power scenario it can be anticipated that the cost of electricity will be as much as 600 CZK /MWh (22 EUR /MWh) lower than in all other scenarios.”
A tender remained open until 2014 for the selection of a supplier of the technology needed for the Temelín nuclear power plant. It ended after the previous government refused to confirm a guaranteed purchase price. The ČEZ company, which owns the nuclear power projects in the Czech Republic, subsequently cancelled this tender. Without guaranteed prices, there was no point in continuing. It is interesting to note that the Finance Minister then, Andrej Babiš, is the current Prime Minister.
After cancelling the tender, the Ministry of Industry looked for other ways to implement its nuclear projects. Three possible solutions were proposed. The first relies on nuclear reactors being built and financed directly by ČEZ, and is supported by Prime Minister Babiš and other politicians. They claim that ČEZ has enough money to do this; however, minority shareholders of ČEZ are vocally against the idea, as they are concerned this will have a negative impact on the value of their shares.
The other two options count on breaking up ČEZ and separating the nuclear projects from the rest of its business. Another crucial subject is how the state will eventually provide the necessary subsidies without which new nuclear reactors is not feasible, irrespective of political declarations.
Industry Minister Marta Nováková told Czech Television that the European Commission suggested her ministry should follow the Hungarian model. Further considerations were revealed in another interview published in the Ekonom weekly, where the minister said: “Energy, primarily nuclear energy, is a political decision, not an economic one. There must be the political will to complete the construction of Dukovany or Temelín and a decision must be made about how to finance it. There is not a single nuclear power plant in the world that could have been built without some form of state aid. That means we will have to count on some kind of assistance if an energy concept stating that we will complete construction of some nuclear facilities applies.”
Nováková has openly admitted that decisions about the future of the Czech energy supply will not consider economic elements. That is probably good news for potential suppliers, but not for Czech electricity consumers.
There is nothing left to do but hope that Prime Minister Babiš[1] will stand by his campaign slogan to manage the state as if it were a firm. In the real world, it is unimaginable for a firm to choose the most expensive solution on the market.
Who will pay for new nuclear?
The government has unveiled their Action Plan for Nuclear Power Development. A review of the numbers reveals that this plan idealizes the situation in the market. For example, the plan counts on investment costs for the reactors which are lower than those in actual market.
Furthermore, the government lacks an elaborated economic study of the possible impacts on the state budget, on consumers, or on ČEZ’s rating. Former Industry Minister Tomáš Hüner acknowledged this fact earlier this year. Before the end of his tenure, Hüner managed to commission the elaboration of economic impact studies of new nuclear reactors. The findings should be presented this autumn.
Calculations done for the ministry by independent analysts indicate a significant future risk to consumers. The economist Jan Ondřich claims the impact on consumers could be up to EUR 1 billion annually. His findings are based on a calculation according to which ČEZ would need a guaranteed price of 115 EUR per MWh. In addition, the government would also have to guarantees loans – as Professor Steve Thomas of Greenwich University warned during his Prague visit last year.
Changing the debate
Instead of promises about additional nuclear reactors, the Czech debate needs a new direction, involving the actual options open for different energy sources Since 2014 only one wind farm has been built, and solar panels added to rooftops have an installed capacity of only several megawatts per year.
The fact that the debate concentrates primarily on looking for opportunities to implement such an economically disadvantageous project as nuclear power means time is being wasted.
[1] In order to make the Czech context clear, the current Prime Minister, Andrej Babiš, entered politics after a career in business during which he became a billionaire in the area of agriculture and the food industry.
Martin Sedlák is program director of The Modern Energy Union (Svaz moderní energetiky), the Union contributes to national debates in Czech Republic. He is as well an author for the Blog Aktuálne.cz.