Czech Republic ‘s nuclear plans need government funding – anxiety in nuclear lobby

The global economic crisis has slashed demand for electricity and weakened the balance sheets of utilities, reducing their ability to finance expensive nuclear projects.

“The chance Temelin will be built is about 50-50 with state guarantees…without them, it is about 10-90.”

Czech nuclear tender seen pivotal after Fukushima
* Bids due for two reactors worth over $10 billion

* U.S., Russian, French firms in the running

* Economic crisis, cloudy energy sector outlook are obstacles

* Deal likely to need government guarantees

By Jan Lopatka PRAGUE, June 29 (Reuters) – As several European countries retreat from nuclear power, the Czech Republic is taking a big step forward in a tender to build new reactors which some in the industry see as a pivotal test of the technology’s future on the continent.

On Monday three U.S., French and Russian firms will file bids to build two units at the Temelin plant, testing the waters in central and western Europe after the economic crisis and a disaster at Japan’s Fukushima plant which stirred safety fears……
Temelin marks one of biggest tenders in Europe’s energy sector and the biggest-ever deal in the Czech Republic, worth something over $10 billion, and possibly much more judging by a history of delays and cost overruns.

Rosatom’s Atomstroyexport and Toshiba U.S. unit Westinghouse are angling to build the 2,200-3,200 megawatt plant that could serve as a reference in Europe for their new designs, MIR-1200 and AP1000….
“It is important that we begin the next wave of reactors in Europe as soon as possible. (Temelin) would certainly give European customers more confidence,” said Westinghouse Regional Vice-President for Customer Relations and Sales Mike Kirst.

CEZ, a 70-percent state-owned company worth $19 billion, needs to replace some of its coal plants heavy on carbon emissions as they face likely closure after 2020.

“Developing nuclear energy is part of our long-term strategy,” strategy director Pavel Cyrani told reporters….

CRISIS WEAKENS ENERGY SECTOR

The global economic crisis has slashed demand for electricity and weakened the balance sheets of utilities, reducing their ability to finance expensive nuclear projects.

At the same time, a boom in U.S. shale gas extraction using a method called fracking has also helped push down conventional power prices.

German wholesale electricity prices have dropped from their 2008 peak at over 90 euros per megawatt hour for baseload power to less than 50.

The cost of permits to emit carbon dioxide has also crashed, removing some of the advantage nuclear power has over fossil fuel.

“There are great risks. Opposition from Austria, Germany …and no way to predict prices of baseload power,” said Jiri Gavor, partner at energy consultancy ENA.

This has led CEZ to enter discussions with the government on guarantees for minimum prices for power from the new plant, possibly along a model discuss in the UK.

CEZ is also searching for potential financial partners for the plant.

Industry and Trade Minister Martin Kuba said in March that a “strategic decision” on a nuclear power plant had to carry other than purely commercial aspects.

Gavor put it more simply: “The chance Temelin will be built is about 50-50 with state guarantees…without them, it is about 10-90.”

Plant costs are hard to predict. Areva’s Finland project, a 1,600-megawatt EPR reactor, has seen large overruns and delays.

The Nuclear Energy Agency (NEA), an agency within the Organisation for Economic Co-operation and Development (OECD), estimated in 2010 the cost of a Czech nuclear power plant at $5,858 per kilowatt.

That would put Temelin’s price tag at some $13-19 billion for two units, without financing costs.

DIPLOMATIC PRESSURE

Austria is a long-time opponent of nuclear power which shares a border with the Czechs just 50 km south of Temelin where two 1,000 megawatt reactors already run. It fiercely opposes the plan.

“No one can give us an absolute guarantee of nuclear power safety. That has been shown by Chernobyl and Fukushima. An atomic cloud does not respect borders,” Environment Minister Nikolaus Berlakovich said at a Temelin hearing last week.

He said Austrian citizens, who staged a string of border blockades when the first Temelin units were built over a decade ago, have filed 23,000 comments on the plan.

Experts fear Germany may also put pressure on the Czechs after they themselves decided to give up on atomic power. ……. http://www.reuters.com/article/2012/06/29/czech-nuclear-idUSL6E8HP17N20120629

June 30, 2012 - Posted by Christina Macpherson | EUROPE, politics

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