Plan for New Czech Nuclear Reactors Seen by the End of 2018

enginestartThe Czech Republic plans to make several important decisions by the end of the year. The first is to figure out a method for paying for the new reactors.

  • New units are needed at Dukovany for it aging Russian VVER units that will reach their 50tgh anniversaries in 2035. (Units 5 & 6)
  • Expanded capacity is needed at Temelin to support the country’s economy and to support climate change goals. (Units 3 & 4)

The main stumbling block is that Czech Prime Minister Andrej Babis opposed guarantees for a rate base when he was finance minister in 2014. Since then it isn’t clear that he’s changed his mind. A billionaire in his own right, he’s been embroiled in a series of political and financial scandals.

CEZ, the state-owned electric utility which also owns and operates the Czech Republic’s current fleet of nuclear plants, has refused to commit to building new ones without some form of state support most likely in the form of a guaranteed rate of return. The utility says that guarantee is essential to attract outside investors.

One of the options CEZ has proposed, to contain financial risk, is to split the firm into nuclear and non-nuclear components, a move that Babis opposes saying the firm is big enough to handle the projects. It doesn’t appear there is much enthusiasm for the “split the difference” option as CEZ CEO Daniel Benes told Reuters on 8/1/18 that a single firm would be strong enough to build all four new reactors.

Czech Industry Minister Marta Novakova told wire services this week (8/30/18) that the government needs to get moving with a decision by the end of the year. The reason, she says, is that it could take as long as a decade from a decision to proceed to bring the new reactors online.

History of Czech Efforts to Expand its Nuclear Energy Fleet

According to the World Nuclear Associations (WNA) profile of expansion plans for new nuclear reactors, in July 2008, CEZ announced a plan to build two more reactors at Temelin totalling up to 3400 MWe, with construction start in 2013 and commissioning of the first unit in 2020. A public tender process for contractors to build the two new reactors at Temelin was released in  August 2009.

Operating Czech Reactors

Operating Nuclear Reactors in Czech Republic: Table courtesy of World Nuclear Association

Note: As a practical matter, while the licenses for the Russian VVER units are listed as “indefinite,” they most likely will have a service life of 40-50 years which would lead to scheduled decommissioning no later than 2035.

At the time, CEZ quoted a March public opinion poll showing 77% of citizens (and 56% of Green party voters) supporting the new Temelin units3. (In 2014, 68% positive opinion was reported.)

The three vendor groups were;

  • a consortium led by Westinghouse – 1150 MW AP1000;
  • a consortium led by Russian firms – 1200 MW VVER
  • Areva  – 1650 MW EPR.

Bids were formally invited by CEZ in October 2011 for supply of two complete nuclear power plant units on a “full turnkey basis, including nuclear fuel supply for nine years of operation.”

Bids were submitted in July 2012.  Rosatom offered full vendor financing, though it said it would prefer 49%.

Areva and Westinghouse originally said that they were not interested in any financing or operational aspects. In mid-2013 the US Export-Import Bank offered to lend CEZ half the cost of the plant if it used Westinghouse technology. The loan would be for 25 years at one percentage point above US 10-year treasury bonds.

In October 2012 CEZ said that the Areva bid was disqualified because it did not meet all the  requirements for the tender.  Areva contested the decision but its appeal was rejected by the government.

In April 2014 CEZ informed all bidders that it had cancelled the procurement process primarily because of a disputes between CEZ and the Finance Ministry over rate guarantees.

In 2017 CEZ held new talks with six companies and consortia which had expressed interest in building reactors at Temelin and Dukovany: Westinghouse, Rusatom, EDF, Areva-Mitsubishi Heavy Industries joint venture Atmea; China General Nuclear Power Corp (CGN); and Korea Hydro and Nuclear Power (KHNP).

Current Likely Bidders for Temelin and Dokovany

Russia considers the Czech Republic to be a “captive market” and since PM Babis owes his coalition government to support from the Communist Party, a Russian deal financing new VVER units (49%) appears to be the leading contender.

This hasn’t stopped South Korea from making a full court press for the business.  According to an English language business wire service in South Korea, Korea Hydro & Nuclear Power Corp. (KHNP) has set out to get orders for new nuclear power plants in the Czech Republic.

Chung Jae-hoon, president of KHNP, visited Prague, Czech Republic on August 15th and meet Jan Stuller, the special envoy for nuclear energy of the Czech Ministry of Industry and Trade, and top officials of the CEZ.

“The Czech Republic is the market that KHNP considers to be a bridgehead for the advancement to Eastern Europe,” said Chung.

“It will not be an easy challenge, but we will mobilize all our capabilities, including our experience of building nuclear power plants over the past 40 years, to win the project.”

With Westinghouse just emerging from bankruptcy, and still carrying the skids marks left by the failure of the V C Summer project, it is unclear whether its private equity owner wants to risk placing a bid without firm guarantees for funding.

Other Nuclear News

French Environment Minister Quits

(Reuters / French wires) French Environment Minister Nicolas Hulot resigned last week in frustration over what he said was “sluggish progress” on climate goals and nuclear energy policy.

Hulot, a former green activist, quit dramatically during a live radio interview following what he called an “accumulation of disappointments.”

He claimed that President Macron was not fulfilling his pledge to cut the share of nuclear power in French electricity to 50 percent by 2025 and to boost renewable energy.

In a burst of wishful thinking, on July 10, 2017, Hulot said on RTL Radio that France might close up to 17 nuclear reactors by 2025 in a new plan to reduce its share of nuclear power.  He did not offer a cost figure for conversion to renewable energy, but critics said it could be in excess of $200 billion.

Hulot complained that investments made in the nuclear industry, like the very expensive bailout of French nuclear company Areva, prevent money from going towards green policies and slow down the development of a renewable energy sector.

Another reason Hulot may have resigned is that the same week he resigned the French government released a report calling for more nuclear reactors to be built to replace the country’s aging fleet.

According to a WNA profile of the French nuclear fleet, all of the 900 MW units (34 reactors) will hit their 40 year mark in the next five years. Given EDF’s difficulties controlling schedule and costs at Flamanville, the report may have been the last straw for Hulot. More on this below.

Report Calls For Five New Reactors In France

(NucNet): A “secret” report commissioned last spring by France’s government proposed building five new nuclear reactors, Les Echos reported on August 30, 2018, two days after anti-nuclear environment minister Nicolas Hulot resigned and said that progress on a shift to renewable energy was too slow.

The report, prepared for Mr Hulot and finance minister Bruno Le Maire, examines how to maintain the industrial capacity of a French nuclear sector.  Among its proposals is the building of five new EPR reactors starting in 2025.

“Government policy isn’t decided by a report,” Mr Le Maire told Radio Classique when questioned about the Les Echos report.

“Nuclear power is an asset for France,” he added, mentioning its low greenhouse emissions and costs he described as “competitive”.

France derives about 75% – the highest percentage in the world – of its electricity from nuclear energy, with 58 commercial reactors operated by state-controlled EDF. Of this number, 34 smaller units, 900 MW, will turn 40 in the next five years.

In 2015, the government of former president François Hollande established an energy transition law which set a target of reducing the nuclear share to 50% by 2025.

In a a surprise move Mr Hulot said in November 2017 this would not be realistic and suggested the deadline to be pushed back to 2035.  At that point all of the 900 MW units would be 50 years old.

Bulgaria Expects To Choose Investor For Belene In Early 2019

(NucNet) The Bulgarian government is expecting to choose a potential investor for the Belene nuclear power station project in early 2019 according to media reports.

The energy minister Temenuzhka Petkova told a visiting delegation of Chinese officials that early 2019 is a “realistic” deadline for choosing an investor for the project.

On June 29, 2018, the Bulgarian government decided to formally revive the Belene project. The government intends to attract private investment for the project, subject to the absence of state guarantees and long-term electricity purchase contracts.

Bulgaria has not announced a tender yet, but earlier reports said four companies are interested in the project. Russia has hopes of capturing the business due to Bulgaria’s status as a former Iron Curtain country.

China National Nuclear Corporation expressed its formal interest in March 2018. A delegation of Chinese officials has visited the site of Bulgaria’s Belene nuclear power station project, the Bulgarian energy ministry said in a statement.

The delegation included representatives of the Chinese National Energy Administration, the state-owned China National Nuclear Corporation, China General Nuclear Power Corporation, and China State Nuclear Power Technology Corporation, the statement said.

Two 1,000-MW VVER pressurized water reactor units were to be built at Belene before the project was cancelled in 2012 because of concerns over financing.

Westinghouse declined to bid on Belene due to uncertainties over the government’s long-term commitment to the project.

CGN UK Says Bradwell B Costs Will Not Be Known ‘For A Few Years’

(NucNet): The company behind the project to build a UK version of China’s HPR1000 (Hualong One) nuclear plant at Bradwell B in Essex, England, will not know the cost of the project until site suitability and feasibility studies are complete.

A spokesperson for China General Nuclear (CGN) UK told NucNet that the site studies will last for a few years and “until we can have a detailed plan of the site we do not know the cost”. He said the project is still in its “very early stage”.

CGN UK’s state-run parent company CGN is a majority shareholder in Bradwell Power Generation Company, a joint venture with EDF, which is planning to build a single HPR1000 plant, also known as the Hualong One, at Bradwell B.

CGN UK chief operating officer Robert Davies told NucNet that the company is not relying on government subsidy for the Bradwell B project. He said that CGN is able to bring debt and equity to the UK “so there will be no demands for investment funding placed on the UK government”.

China Likely To Miss Ambitious Nuclear Target ‘By A Few Years’

(NucNet) China is officially still targeting 58 GW of installed nuclear capacity by 2020 – up from almost 36 GW today – although this “ambitious” target is likely to be missed by a few years, Shanghai-based energy research company Nicobar told NucNet.

Nicobar said the 58 GW will probably be reached in 2021 or 2022. On a longer timeframe, China’s goal is to have 110 nuclear units in commercial operation by 2030, but this target is likely to be adjusted in the next Five-Year Plan, the first draft of which will appear in 2019.

“Based on the current roster of planned builds, 110 reactors by 2030 is technically possible but difficult from a logistical point of view,” Nicobar said. “At the moment there simply aren’t enough potential reactor sites to double the fleet in the next 12 years.”

Hanhikivi-1 Construction Start Scheduled For 2020

(NucNet) The company building the Hanhikivi-1 nuclear unit in northwest Finland says its target is to get the construction license in 2019 and to begin construction in 2020, a spokeswoman told NucNet.

Fennovoima, which is building a Russia-supplied 1,200-MW VVER pressurized water reactor at Hanhikivi, was responding to unconfirmed reports in Russian media that the project is behind schedule.

The latest schedule on Rosatom’s website says construction was scheduled to start in 2018 with commercial operation in 2024. Fennovoima submitted the construction license application in the summer of 2015.

In March 2018 Fennovoima said it faced challenges in 2017 delivering design documentation to the regulator, but remained on track to receive the construction permit in 2019.

According to Fennovoima’s website, the total investment cost for Hanhikivi-1 will be between €6.5 and €7bn, which includes initial plant costs, financing and waste management. These are numbers from a 2014 estimate which have not been updated to take the current schedule into account.

Fennovoima says that when Hanhikivi-1 is complete it will provide approximately 10% of Finland’s electricity needs.

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