NLast Monday, Bijan Sabet had every reason to be happy when the American ambassador in Prague signed the purchase contract for 24 US F-35 fighter jets for a price equivalent to 6.3 billion euros. But just a few days later, the enthusiasm turned into disappointment: the Czech government removed the American company Westinghouse from the race to build new nuclear plants in the Czech Republic.
This is all the more annoying for the Americans because Prime Minister Petr Fiala announced at the same time that he would now possibly have four new reactor blocks built instead of just one – a deal that is likely to overshadow the deal with the fighter aircraft.
The power plant manufacturer Westinghouse, which is very active in Poland, Ukraine, Bulgaria and Slovenia with US government support, is out of the Czech race with its AP1000 model because it only submitted a non-binding offer, as Economics Minister Jozef Síkela announced.
Race between France and South Korea
However, the government insists on firm commitments rather than non-binding information. Westinghouse's competitors from Russia, Rosatom, and Beijing's state-owned company China General Nuclear Corporation were not even allowed to take part in the tender for security reasons.
What remains are France's Électricité de France (EDF) and Korea Hydro Nuclear Power (KHNP). Both should now submit binding offers by April 15th. The government then wants to evaluate this and decide on the order by the end of the year.
The plan is for the first new nuclear power plant to go into operation at the Dukovany site in 2036. Today, around 40 percent of the electricity generated in the Czech Republic comes from four Soviet-built nuclear reactors in Dukovany and Temelín, and 36 percent of the electricity is generated in lignite-fired power plants. Since lignite-fired power generation is due to end in the mid-1930s for climate reasons, a replacement is needed. It should come from climate-friendly nuclear power plants.
Broad support for nuclear power
Unlike its neighbors in Germany and Austria, this is undisputed in the Czech Republic. All major parties support the expansion of nuclear power, and they know that the majority of voters are behind them. The Czech Republic is one of the states in the EU and at international level that is committed to expanding nuclear energy. Prime Minister Fiala wants to make the country a center for nuclear technology. Without nuclear energy it will not be possible to achieve CO2 emissions by 20502-build a neutral economy.
As expected, KHNP and EDF expressed satisfaction with the vote, including with the expansion of the tender. “This decision shows that the Czech authorities are aware of the industrial and economic benefits of the fleet approach,” said an EDF representative. Fiala had previously let it be known that for a larger order you could expect a price reduction of up to a quarter. “We have therefore decided to invite bidders to submit binding offers for the supply of up to four nuclear reactors,” he said.
Generally not a smooth build
What it would ultimately cost to build the reactors remains uncertain. Representatives of the state-owned company ČEZ, which is to be responsible for the construction and expansion, spoke of 160 billion crowns (6.5 billion euros) per reactor. However, that was calculated based on 2020 prices.
The cost explosion on EDF's Hinkley Point C new building project in southern England has recently shown how erroneous price estimates and construction forecasts can be. Not only will it be completed several years late, but it will also be up to a third more expensive than previously estimated. Delays lasting several years are now the rule rather than the exception in the construction of nuclear power plants.
State-owned company at issue
Even if the expansion of nuclear energy in the Czech Republic is undisputed, the parties are still arguing about how to get there. At the center is the listed energy company ČEZ, 70 percent of which is owned by the state. ČEZ should not only build gas power plants and wind farms, but also organize and monitor the construction of new nuclear power plants, while the government ensures their financing. This could make legal and ownership changes necessary.
Ever since the energy price crisis last year, which was accompanied by the company's exorbitant profits, there has been a debate about whether the government should not take over the company completely and buy out the independent shareholders. Interior Minister Vít Rakušan himself publicly considered this demand, made by the opposition ANO party of former Prime Minister Andrej Babiš, just a few days ago – and thus not only increased the pressure on the price of the ČEZ share, but also received opposition from Fiala.
The Prague government is aware of the better options for intervention in an infrastructure company that is completely owned by the state and is important for supply. On the other hand, they also appreciate the influence of private investors in taming politics, not least in view of the high poll ratings for Babiš's populist, right-wing nationalist ANO party.
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