Commentary: Outcome of the tender for new nuclear units in Czechia

The Czech government has decided in recent days on the outcome of the tender for the construction of new nuclear units in the Czech Republic. The winner was South Korean company KHNP with its APR1000 reactor. At the same time, the government decided to build two units at Dukovany, with the contract also including an option for two units at Temelín. A decision on exercising the option will be made over the next five years.

In my view, this is the best possible outcome. It was not so much about whether a particular bidder would win. Both reactors on offer are high-quality Generation III reactors in technical, safety and operational terms, and fully meet all the tender conditions. Both bids have their advantages and drawbacks. The companies bidding in the tender are also of high quality. Let us recall that the South Korean company offers the APR1000 reactor, while French company EDF offers the EPR1200 reactor. In both cases, these are state-owned companies with extensive, long-term experience in both building and operating nuclear units.

In what respects is KHNP's bid better?

I consider it very positive that, according to the prime minister's statement and comments by a number of experts involved, KHNP's bid was better in every parameter. These were mainly economic parameters, as well as guarantees of meeting deadlines and financial terms. I would perhaps highlight one interesting difference in the bids. A non-binding tender parameter was licensing the smaller unit in the vendor's home country. Neither company plans to build smaller versions of the units offered in the tender at home. South Korea has a very high population density, a large power sector and little suitable land, making larger units more suitable for it. France does not have the same population density or shortage of space, but larger units are better suited there as well. They therefore do not need to license smaller units at home. Only the South Korean company has committed to domestic licensing. If it actually carries this out, the Czech nuclear safety regulator, SÚJB, will have a greatly simplified task in licensing the units in Czechia. And SÚJB will indeed have a great deal of work to do and will need to significantly increase its staff numbers. Such improved conditions will therefore help it substantially. Personally, I believe the better parameters of the South Korean bid also resulted from KHNP's greater efforts to win the contract, and thus its greater willingness to provide guarantees on deadlines and the economic offer. It may also have played a role that KHNP could be more confident in precisely these areas, based on its experience building APR1400 reactors at the Barakah nuclear power plant in the United Arab Emirates.

The clear superiority of the South Korean bid in the precisely defined tender parameters is particularly important because it reduces the risk of EDF challenging the verdict and of subsequent legal disputes. The situation concerning the exclusion of Westinghouse's AP1000 reactor is telling in this respect. This was the third participant in the tender. This reactor also fully met the tender's technical and safety parameters, and Westinghouse likewise has very long experience in nuclear technologies. The reason for excluding Westinghouse's AP1000 reactor was its failure to meet the tender requirement that the supplier guarantee project delivery and construction completion dates. It was therefore not a failure to meet technical and safety requirements. That this was a failure to meet an essential tender condition is also shown by the fact that Westinghouse did not challenge the decision and accepted it.

It is also appropriate here to mention the licensing dispute between Westinghouse and KHNP. The development of nuclear power in South Korea is very closely tied to the United States and Westinghouse. South Korea was one of the countries to which the US offered peaceful nuclear technologies as part of efforts to reach agreements on controlling nuclear weapons and technologies and to develop the peaceful use of nuclear energy (in more detail in a recent article on nuclear weapons and nuclear energy). The first pressurised-water power reactors were thus Westinghouse models, and they formed the basis for developing new South Korean reactors with an ever-growing share of South Korean technologies and improvements. This was a gradual indigenisation of pressurised-water reactors. I described the development of South Korean nuclear power in a recent article. Westinghouse and KHNP differ in their view of the degree of indigenisation and use of US licences. It should be stressed that the issue has two aspects. Delivering nuclear technologies based on US licences to other countries requires approval from US government authorities (DOE). However, there is a dramatic difference here between a NATO member and US ally such as the Czech Republic, and the United Arab Emirates. US courts have already ruled that Westinghouse's complaint and demands are apparently unfounded in this respect. The other matter concerns financial and other claims associated with the use of licences. In this case, however, this is a financial settlement between KHNP and Westinghouse that will not affect the Czech contract, and KHNP has guaranteed that it will cover any financial impacts. I must also stress that I am not a lawyer and do not see all the legal nuances of the matter.

Interestingly, French pressurised-water reactors were also originally based on Westinghouse technology. In this case, however, indigenisation has been fully completed, and EPR units are moreover a combination of the best features of French and German reactors. I wrote in detail about the history and present state of French nuclear power in a recent article.

As mentioned, both bidders offer smaller variants of their Generation III reactors. In this case, the Koreans have an advantage. Their APR1000 model is based on the OPR1000 unit, which is Generation II and has the same output, and on the higher-output 1400 MWe Generation III APR1400 reactor, which nevertheless incorporates all the improvements and parameters of a higher-generation reactor. Both reactors can serve as references; the APR1000 will be an OPR1000 unit incorporating all improvements used in the APR1400 unit and associated with Generation III reactors. All three reactors use a two-steam-generator system.

For the French EPR reactor, the reference unit has an output of around 1700 MWe and four steam generators. The downsized EPR1200 version will have only three steam generators. The project changes are therefore much greater. As mentioned, both French and Korean pressurised-water reactors share the same historical basis and therefore use Western-type fuel. The APR1000 and EPR1200 will have the same number of fuel assemblies, 177 in total.

Another advantage for the Koreans in localising supplies is that it owns Doosan Power here and therefore expects the turbine to be of Czech origin. This would not be the case with the French project. KHNP's bid provides for up to 60 % localisation. We shall see what the actual share ultimately is.

Parallel operation of new and old units at Dukovany

Another government decision that I consider very important and justified was approval for the construction of two units at Dukovany and an option for another two at Temelín. Building two units together brings substantial savings and accelerates construction. A path to a low-emission energy mix is unthinkable in Czechia without new nuclear units. The two new units at Dukovany will eventually replace the existing ones, although they will operate in parallel for some time. The two new units at Temelín should then primarily ensure the replacement of further coal-fired units. Today's government decision is therefore crucial, corresponds to what I consider optimal, and pleased me.

Let us recall that the existing Dukovany units are currently expected to operate for 60 years, and would thus be shut down around 2045. If the first new unit is completed as planned in 2036 and the second in 2038, there will be an overlap of several years. This may create problems with available cooling capacity. The site is designed for operating one new unit alongside the old ones. This was also why the tender limited output to 1200 MWe. If two new units operated together with the old ones, cooling capacity might not be sufficient, especially during summer months.

However, this situation has a number of possible solutions. Outage periods can be optimised so as to minimise the time when all units are operating. In summer, when demand is usually lowest and cooling-capacity problems are greatest, part of the output could be shut down. Some units could operate at lower output and participate in grid balancing and in providing backup for operating sources. Such a service will be in great demand at that time. If economically appropriate, the water retention and cooling system could be modified to increase water potential and reduce water consumption for cooling. Personally, I believe the longest possible operation of both old and new units would be highly useful and would help replace retiring coal-fired units. The existing units should certainly not be shut down before their full operating potential is used. I would even support operating them for 70 years, if possible. Two units of the same type in Finland, built before the Dukovany units, are licensed to operate for such a period. In that case, they would run until 2055.

Nuclear power – the foundation of Czechia's path to low emissions

As mentioned, the government approved an option to build two units at the Temelín site. A decision on building this pair will be made over the next five years. At the same time, the issue of financing and negotiating its approval at European level will need to be resolved. If the Czech Republic wants to transition to low-emission power generation, it is essential for it to build all four of these large nuclear units.

As the examples of France, Sweden, Switzerland, Ontario, Slovakia and Finland show, it is possible to build a low-emission power system based on a mix of nuclear and renewable sources. Conversely, Germany clearly shows that even with extreme economic and financial potential, a low-emission mix based solely on renewables cannot be achieved. This is possible only under very specific geographical conditions, such as those in Norway or Iceland.

The Czech Republic faces a particularly difficult situation in using solar and wind sources because its neighbour Germany, which generally has similar weather, is building extremely large wind and solar capacities. When the wind blows and the sun shines, Germany needs somewhere to dispose of surplus electricity, and prices can even turn negative. Conversely, when there is no wind or sunshine, Germany will not supply us with anything and must itself obtain electricity elsewhere. Prices on the shared market then rise extremely sharply.

Anti-nuclear activists very often claim that nuclear units are unsuitable for the current power system with substantial solar and wind capacity. When there is abundant sunshine and wind, prices are low and generating sources must reduce output at the same time. According to them, this worsens the economic efficiency of nuclear reactors. This is not true, however. Nuclear reactors benefit in such a mix from high prices when there is no wind or sunshine, while when the wind blows and the sun shines they can be paid for balancing services. Regardless of the weather, they can not only reduce but also increase output as needed. And new units have very good load-following capability. Their output does not depend on weather and is stable and highly predictable. Their operator can therefore sell it far in advance, in which case the price obtained does not depend on weather-driven fluctuations. They can even benefit from negative prices. When prices are negative, they shut down part of the output already sold and, in addition to the sale price received, collect the bonus for curtailment provided by the negative price.

Conversely, solar and wind sources effectively cannibalise one another across the entire region with similar weather. And they do so very effectively. When anti-nuclear activists are warned that in this case it truly makes no sense to keep building ever more capacity, they claim that storage and hydrogen production through electrolysis during periods of electricity surplus will solve everything. At present, however, the question of efficient large-scale storage and hydrogen production has not been resolved, and it remains uncertain whether and when this challenge will be solved. If a solution is found, it is clear that electricity from a nuclear power plant can be stored just as well as electricity from renewable sources, and hydrogen can equally well be produced from nuclear electricity. From this perspective, building nuclear sources is more advantageous, as they also operate when there is no wind or sunshine.

As for small modular reactors, they will not replace large units. They will only with great difficulty be cheaper for delivering the same capacity. We have sites ready for large units at Dukovany and Temelín. If commercial models of small modular reactors emerge in the 2030s, it will be efficient for us to deploy them in a more decentralised form. It will make sense to build them at the sites of existing coal-fired power plants and heating plants. ČEZ is also planning such deployment. Only a training and prototype unit would be built at the Temelín site, where space has already been reserved for it. This will accelerate the licensing and construction of the first such unit.

In my view, the Czech Republic should not allow coal-fired sources to be shut down without replacing them with low-emission sources. Their current displacement from the market is caused purely, and artificially, by the price of emissions allowances. If the price of emissions allowances does not fall, it is necessary to negotiate approval for capacity payments to coal-fired sources, as Germany and Poland have done. This is important for another reason as well. If coal-fired power plants are shut down, coal mining will also cease to pay off. And a substantial share of small and larger heating sources depend on coal. Building and commissioning gas-fired generation for a relatively very short period, for which we also lack approval, is not really meaningful.

Conclusion

It is clear that dates and costs can hardly be guaranteed. The stated construction cost of around 200 billion crowns is very favourable. Personally, I think there will be some increase in cost and some delay, but it should not be substantial. However, this will be very demanding not only for KHNP itself, but also for local state authorities handling local permitting and licensing, ČEZ itself, and a whole range of subcontractors. It is true that KHNP has not yet built a nuclear unit in Europe, but it has a European EUR licence for its APR1000 unit. Most important, however, will be the level of cooperation among all those involved and how well they can accommodate one another. This will be crucial.

If Czechia and Europe are serious about moving away from fossil sources and transitioning to low emissions, or even carbon neutrality, they cannot do without intensive use of nuclear power. To maintain or even raise their standard of living and economic competitiveness in today's world, they need stable and secure electricity supplies at competitive prices. And it is clear that demand will grow with the current electrification of transport, heat supply and industry. Let us recall that large computing servers are extreme consumers, and their consumption will continue to rise rapidly with growing use of artificial intelligence.

From this perspective, the intensive campaign by green anti-nuclear activists against nuclear sources is a huge paradox. If they had not succeeded in Germany in closing nuclear reactors that could still have supplied needed low-emission electricity for decades, Germany could already have a low-emission power system. Compared with France, it would have had a lower share of nuclear sources and a larger share of renewables, but dramatically lower emissions. The situation across Europe would have been much better. Fortunately, green anti-nuclear activists in Czechia have succeeded in meeting their aims in the fight against nuclear energy only partly. More than 20 years ago, in discussions with them, I said that it would ultimately become clear that they would be the greatest culprits in why Europe and the world did not free themselves from dependence on fossil fuels in time. The current situation clearly confirms this.

Let us recall that they also claimed that the Temelín units would not be completed or commissioned, and that if they were commissioned, they would be so expensive that they would never pay for themselves, would not have competitive electricity prices, and would have to close in competition with renewable sources. They would also have shut down Dukovany long ago. We now see that Temelín and Dukovany are a gold mine for ČEZ. The same organisations are now making exactly the same statements against the new units. There is no sign of any self-reflection, learning from the course of developments, or overcoming ideological blindness.

Even the dramatic deterioration in security and in the European Union's position in the global context has not prompted any self-reflection from them. Europe has very limited raw-material resources and is extremely dependent precisely on its high level of science and industry and on sufficient energy from non-fossil sources. As early as 1977, Andrei Sakharov wrote that nuclear power was crucial specifically for Western Europe and Japan. A nuclear renaissance in the European Union is extremely important for its security and for preserving democracy in competition not only with China. At present, the question of how to survive under the shadow of nuclear weapons and how to ensure sufficient non-fossil energy has become dramatically more urgent. These are questions already addressed after the Second World War by Robert Oppenheimer and his contemporaries. I also discussed these issues in more detail, including a detailed description of the principles and construction of nuclear weapons, in a recent article.