Poll: What is the optimal generation mix for the Czech Republic, and does it include nuclear? (3/4)

In cooperation with students of Security and Strategic Studies at Masaryk University, we interviewed four figures from different areas of the Czech energy sector. In this series of views on the future of Czech energy, we present their perspectives on the optimal energy balance of the Czech Republic in the coming years and their views on the construction of new nuclear capacity.

The third respondent whose views we are publishing is Vladimír Wagner of the Nuclear Physics Institute of the Czech Academy of Sciences, a member of the so-called Second Pačes Commission, which helped prepare an update of the State Energy Policy.

The Czech Republic should aim for at least a balanced energy balance. It should certainly avoid a negative balance. This applies primarily to electricity. And not only in terms of the overall annual balance, but also in the sense that it should be able to provide sufficient capacity for its needs at any time of year and at any time. The main reasons are as follows. Electricity has very limited options for accumulation and storage. Moreover, an outage has an immediate and fundamental impact on security. This is a key difference compared with food or other commodities. At the same time, it must be taken into account that there will be a relatively long period during which our neighbours and a large part of the European Union will face shortages in winter, and when the sun is not shining and the wind is not blowing, and will rely on imports. During these periods, we will therefore have to meet our needs ourselves. More generally, it is certainly true that only those who can look after themselves can help their neighbours and partners. It should be recalled that a transition to electric mobility and the electrification of other sectors are expected. It is therefore difficult to assume that growth in electricity consumption can be prevented, even with maximum use of savings and productivity improvements.

Given that reliable supplies of electricity and other energy are crucial to state security and to maintaining the population's standard of living and social conditions, it is necessary above all to proceed prudently. Existing sources should therefore be shut down only as quickly as we are able to replace them. So far, we have had relatively large reserves both in installed capacity and annual production in this area. We have therefore been among the largest exporters of electricity. However, this will now change dramatically. The planned closure of coal-fired units, which their operators no longer count on due to their age and newly established environmental limits, will put us in a situation where our balance is roughly even, and during winter inversions we will even begin to face a shortage of the necessary capacity. However, replacements must be procured for the additional coal-fired units that will then gradually be shut down in the following years. Likewise, ageing reactors at Dukovany will need to be replaced in the 2030s, and no later than the 2040s. Current photovoltaic and wind sources will also reach the end of their service life. Given the general pressure in the European Union to transition to low-emission sources, and the fact that gas is not such a source, the aforementioned ageing sources need to be replaced by nuclear and renewable sources. Due to our geographical conditions, the possibilities for building renewable sources are limited here; moreover, our wind turbines can hardly compete economically with those on the coast. Renewable sources are therefore effective here in the form of decentralised sources connected to local grids. We therefore cannot do without building large-scale nuclear capacity to replace the old reactors at Dukovany and also some of the retired coal-fired units. Two Generation III units need to be built at Dukovany, as well as at Temelín. At the same time, progress must be made in building mainly decentralised renewable sources, ideally in an efficient combination tailored to local conditions. Strengthening grid balancing and storage capabilities is then very important. It is clear that gas-fired sources will also need to be used efficiently, at least in the coming years.

Two areas need to be distinguished here. The first is geopolitical and ideological. Naturally, in this area, by purchasing products and large investment projects that are not made by our allies, we support our geopolitical competitor. However, the question is whether excluding Russia and China from the selection process, resulting in us not building the nuclear units and remaining dependent on supplies of Russian gas and photovoltaic panels from China, would be better from a geopolitical perspective.

The second area concerns security, technological and economic issues. From this perspective, I believe the risks are minimal. I will try to explain why I do not fear security risks to the interests of the state:

• Both the Chinese and Russian Generation III reactor designs rank among the best in technological and safety terms.
• Fuel for these reactors and their servicing can be provided by several companies, including Western ones. For example, Westinghouse also supplies fuel for Russian units.
• Rosatom and CGN have built the largest number of Generation III units. Unlike others, they are currently able to keep costs and construction times close to projections.
• Suppliers often work in consortia, so for Russian VVER1200 units being built in Finland and Hungary, Framatome will supply the control systems and GE Power the turbines.
• Rosatom and CGN have already completed units of this type abroad: Rosatom in Belarus and the Chinese company in Pakistan. Rosatom is building the largest number of units abroad, more than twenty. This is more than it is building in Russia, and any breach of commitments on an international project would jeopardise its reputation and important business opportunities. The contracts under which these projects are being carried out are of a standard international level.
• Rosatom is also building three Generation III units in the European Union, while CGN is involved in the construction of Hinkley Point C and will probably also be involved in the construction of Sizewell C. Its units should then be built at Bradwell B.
• A number of Russian units also operate in European Union countries (Bulgaria, Czechia, Finland and Hungary). There have never been problems with Rosatom failing to meet its commitments. Nothing of the sort has occurred in relation to Ukraine either, which has very tense political relations with Russia.
• The unfinished units at Temelín and Mochovce were completed without Rosatom; this was possible and did not cause fatal problems.

Every major investment is, to some extent, an economic risk. Especially when it involves a project so strongly influenced by politics. A Generation III nuclear unit is a very large, long-term investment. Construction takes more than ten years, while operation extends beyond sixty years. A number of political administrations will come and go during that time. To reduce economic risk as well, agreement on the construction of the nuclear unit, the method of selecting the supplier and the implementation of construction is crucial. It is therefore impossible to do without a broad political consensus among the main political parties and state backing and political support, which would reduce political risk and also make it possible to optimise the financing model by lowering the cost of capital. The contracting authority must therefore have society-wide political support. At the same time, construction should only begin after the financing model has been resolved and approved by the European Union. It is also crucial to draft contracts with the supplier very carefully and to insist that all necessary information and documentation be provided sufficiently far in advance.

I take technological progress in renewables, nuclear sources and storage into account in my considerations. However, I do not expect a key technological breakthrough that would dramatically change the situation before the middle of the century. Of course, I cannot rule it out. The first commercial small modular reactors should emerge in the 2030s. They could help nuclear power penetrate decentralised electricity generation and district heating. However, they can hardly compete with large Generation III units at locations where a construction site with the relevant permits has been approved, as is the case with Dukovany and Temelín. It can also be expected that the parameters of Generation III units will improve as the number of units built increases.

It is clear that the parameters of renewable sources, storage and balancing options will improve. The development of the shares of individual sources may therefore differ depending on future progress in different areas. This is why the latest update of the State Energy Policy does not state precise values for individual sources, but rather broader ranges. However, I do not expect such a rapid and fundamental breakthrough in storage and in the parameters of individual sources that would enable our path to low-emission energy without building several Generation III reactors and intensively developing mainly decentralised renewable sources and means for storage and grid balancing.