nuclear-news

Czech Republic’s nuclear power plans unraveling, unaffordable

Stalemate Hits $10 Billion Czech Nuclear Plan on Funding, By Ladka Bauerova on March 15, 2012  The Czech Republic’s $10 billion plan to build two atomic reactors near the German border that could supply electricity to the Bavarian industrial heartland is unraveling over financial and pricing disputes.

CEZ AS (CEZ), Europe’s only utility with an atomic project out to bid, is beset by falling power prices and predictions that its financial muscle is too weak to safeguard investors. The Prague- based power
company’s two most senior executives clashed last month on how to fund
the reactors.

“The project simply won’t be financially profitable,” said Ivan Kotev,
an analyst with Prague-based advisory firm Candole Partners who
co-wrote an economic feasibility study of the plan in January. “It’s
unrealistic,” Kotev said in an interview.

The developments are a blow to nuclear contractors Areva SA (AREVA) of
France, Toshiba Corp. (6502)’s Westinghouse unit and a Russian-Czech
consortium. Each is preparing bids by a July deadline that will offer
to build their latest model of reactor which, in each case, has yet to
run at an operating nuclear station…..
The Temelin project may not be able to pay itself off given low prices
of power and carbon dioxide allowances, which aren’t expensive enough
to encourage utilities to switch to emission- free technology,
Macquarie’s Heck said.

Czech power prices for next-year have declined 5 percent in the past
year to about 50.75 euros a megawatt-hour…..
7 Billion-Euro Financing
To pay for Temelin, CEZ would have to borrow more than 7 billion euros
($9.1 billion), which would raise its debt-to- equity ratio above the
average among its European peers, according to the Candole research.

Both CEZ and the Czech government — which controls 70 percent of the
company’s shares — say they are determined to see the project
through. Yet they are sending confusing signals about how they plan to
pay for it…. The enormous price tag, probably combined with high
insurance premiums and interest rates, will make it necessary for CEZ
to seek state help at the expense of consumers and small shareholders,
Kotev said. http://www.businessweek.com/news/2012-03-15/stalemate-hits-10-billion-czech-nuclear-plan-on-funding-energy

March 17, 2012 - Posted by Christina Macpherson | business and costs, EUROPE