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Illusion of rational choice, in Czech government’s plans for nuclear power

The Czech Nuclear Illusion  ČEŠTINA  29. Jul. 2015 by Martin Sedlák   In the first week of June the Czech government adopted an action plan that is supposed to lead to the construction of four new reactors in the country—first in Dukovany and then in Temelín. The government’s decision, however, is not the product of a rational political debate; it is the result of the long-term erosion of responsible governing. Therefore, the Czech Republic can serve as a textbook case of how decisions about the future of energy should not be made.

An Open-Ended Nuclear Action Plan

The National Action Plan for the Development of Nuclear Energy was drafted by the Ministry of Industry and Trade (MIT) along with the Ministry of Finance (MF). It is based on this year’s updated State Energy Policy, which is supposed to lead to the Czech Republic increasing its share of nuclear energy to up to 50% by 2040. “In 2040 the fuel mix for electricity generation will comprise 46 to 58% nuclear, 18 to 25% renewables and secondary sources, 5 to 15% natural gas, and 11 to 21% brown and black coal,” claimed Minister of Industry and Trade Jan Mládek (Social Democrat) upon publicly presenting the new energy policy. If the scenario envisioned in the State Energy Policy actually plays out, nuclear energy will become the dominant source of electricity in the Czech Republic for a long time to come. In the decision-making process the Czech government rejected a policy based on renewables or natural gas. Politicians were particularly opposed to renewable energy due to its high price. However, as this paper demonstrates, Czech politicians’ rejection of green energy was not founded on economic data but on ideology, as the high price of nuclear energy seems to pose no problem………..

A Radiant Heritage

In the Czech Republic we call the MIT’s methods salami tactics: The current government is having a project drawn up for the construction of new reactors in which billions of Czech crowns will be invested. There is thus a real threat that future politicians will inherit a grim inheritance from which they will have to complicatedly work their way out of. Or they will have to commit themselves to massive subsidies from public sources—which (at least according to available public documents) have not yet been consulted with the European Commission over adherence to business competition rules.

Calculations made by independent analysts suggest that there may be a substantial threat to consumers in the future. For example, in a recent study Candole Partners, a consultancy group, has calculated that the economic impact on consumers could be as much as one billion euro per year. The author of the study, economist Jan Ondřich, confirmed that the necessary guaranteed floor price for new nuclear reactors would have to be 115 EUR/MWh.

The looming threat of massive subsidies is the reason that in early 2014 the government rejected guaranteed nuclear energy prices and ČEZ subsequently cancelled the call for bids for building new reactors. For the time being, Prime Minister Bohuslav Sobotka (Social Democrat) and Deputy Prime Minister Andrej Babiš have kept this line. The only government minister who is not against long-term public support for introducing guaranteed prices for energy produced by new reactors is Minister of Industry Jan Mládek.

His opinion copies the position of ČEZ: “New units can be built only with a guaranty from the government. This means using the same model as the British have,” Ivo Hlaváč, chief external relations officer of ČEZ, explained to EurActiv last year.

Unfortunately, the National Action Plan will not help Czech politicians freely decide about the possible risks of proceeding along the nuclear energy path. In this plan the MIT has underestimated nuclear energy investment costs and in general only presents the positive aspects of the nuclear industry without addressing the possible negative impacts it might have on the economy. For example, the plan anticipates reactor investment costs of 4,500 EUR/kW, a far cry from the real expenses, which range from 6,000 to 9,750 EUR/kW. It also does not contain a contingency plan if construction is behind schedule or over budget. Current experience from Finland and France shows these risks to be very real, just as the construction of Temelín and other large infrastructure projects in the past have done.  In 1993 the then prime minister, Václav Klaus, decided to complete the Temelín project: new reactors were supposed to be ready by 1995 for a price of 68.8 billion crowns (2.6 billion EUR in current prices). Instead of 1995, the reactors were connected to the grid six years later. The total price of both reactors at Temelín climbed up to 112 billion crowns (4.2 billion EUR in current prices).

Once Again, We Won’t Have Enough Electricity!

The government’s current steps contained in the National Action Plan for the Development of Nuclear Energy are not the first attempts to promote the construction of more reactors. Both in the present and the past, the same trick has been used to justify the expansion of nuclear energy: the MIT has repeatedly made the claim that we need new reactors because without them we will have nothing to power our light bulbs. For example, in 2007 Minister of Industry Martin Říman claimed that “at the turn of the decade we will be consuming more than we can produce.” Now it is 2015, but we have yet to register any shortage of electricity. What is more, since Temelín went online, we have exported more energy than we produce annually.

The government used the same trick to defend the completion of the two reactors currently at Temelín………..

Considering the fact that European Commission officials are not familiar with the Czech situation and its ideological context—in which Czech politicians uncritically accept nuclear energy but reject renewables—there is a threat that the European Commission might take the Czech government’s bait hook, line, and sinker. The Commission might even end up helping the Czech Republic set up subsidies for nuclear reactors while at the same time destabilizing the modern renewable energy industry.

The steps the Czech government has taken toward preparing the groundwork for possible public support for nuclear energy in the future and its attempts at disrupting the stability of investments in renewable energy will lead to green energy remaining marginal. Moreover, last year the Ministry of Industry was so busy thinking up its nuclear plans that it brushed aside its responsibility to update the National Action Plan for Renewable Energy. Solar energy is becoming cheaper by the day. Nonetheless, two years ago growth in this field was stopped dead in its tracks. Even if administrative rules are simplified, renewed interest in solar power is not expected as this year’s amendment to the Energy Act has introduced new barriers. Support for wind energy was also eliminated two years ago and is not planned for the future. The Czech Republic also lacks a detailed, functional plan for utilizing the great potential energy efficiency measures offer.

Translated from Czech by Nicholas Orsillo

August 7, 2015 - Posted by | EUROPE, politics

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