Positive signals from international energy forum in the Czech parliament

The International Energy Forum, held in the Chamber of Deputies, focused on nuclear energy. It featured Prime Minister Andrej Babiš, Minister of Industry and Trade Marta Nováková, and several key figures who will determine the implementation of new nuclear capacity construction. In my view, the discussions contained a number of positive aspects.

The International Energy Forum was held on 21 February 2019 in the Chamber of Deputies and focused mainly on the construction of new nuclear capacity. It had a truly distinguished line-up. In addition to representatives of the organising Chamber of Deputies, Prime Minister Andrej Babiš and Minister of Industry and Trade Marta Nováková spoke at the opening. The speeches by Jaroslav Míl, Dana Drábová and Daniel Beneš were particularly revealing. Jaroslav Míl is the relatively newly appointed commissioner for the construction of new nuclear capacity, Dana Drábová chairs the State Office for Nuclear Safety, and Daniel Beneš is CEO of ČEZ.

I would strongly recommend that anyone interested in energy listen to the entire conference (available, for example, here). For the first time since the cancellation of the Temelín tender, a clearer and more comprehensive vision for the process of building new nuclear capacity in the Czech Republic was presented. Personally, I consider the very serious approach taken by all speakers to be extremely important and encouraging. What exactly was clarified, and what do I consider the key positive elements?

As was clear from Andrej Babiš's speech, construction at Dukovany has become the priority. The reason is fairly clear. The cancellation of the tender, which not only the Prime Minister considers a mistake, pushed the potential completion of construction dangerously close to the end of the operating life of the current Dukovany units. Preparations at Temelín will continue. This is not only a backup option, as the Czech State Energy Policy envisages the construction of a larger number of nuclear reactors. Not only ageing nuclear capacity but also coal-fired power plants being phased out need to be replaced.
It is very important that political representatives stressed the need to base the decision on the construction method on the broadest possible support and consensus among government and opposition parties, various associations and experts. This is precisely the necessity I have stressed here many times. It is important to start construction, but it is far more important to complete it successfully. Long-term, broad support and consensus among all stakeholders are crucial to that.

The investor in the construction will be ČEZ through its Dukovany 2 subsidiary. ČEZ will conclude a risk-sharing agreement with the state. Under this agreement, ČEZ will bear risks arising from poor project management, or errors in preparation or organisation. The state will assume risks related to public administration, regulation and political decisions. During the project, it will be possible, under defined conditions, to transfer it from ČEZ to the state. This agreement should ensure a low level of risk and low-cost financing for the investment. It will therefore be a strategic project ensuring secure and affordable electricity for the Czech population and industry. From this perspective, the price of electricity from it will be closer to that planned for Hungary's Paks II project than for Hinkley Point C.

What matters is a prudent approach and the declaration that the project will proceed in such a way that it is prepared as carefully as possible at every stage, without risky steps being taken prematurely and with realistically substantiated deadlines. The basic stages were described in Jaroslav Míl's very serious speech. He would like to agree the contract between the state and ČEZ by May this year. The project will then proceed in stages. During the first stage, a planning decision and a nuclear facility siting permit should be issued by the State Office for Nuclear Safety. A tender for the supplier should be launched as early as 2020 to 2021. By 2024, the bids should be evaluated and the tender winner recommended. During the next stage, by 2029, a contract with the supplier should be signed and a construction permit issued. Once construction preparations are completed, work should begin in 2030.

A balanced agreement with the European Union and minority shareholders, as well as their approval of the financing approach, are also necessary conditions. While meeting the needs of Czech society, citizens and industry should clearly be paramount, the legitimate interests of minority shareholders should nevertheless be respected. The problem may be that some of them are speculative investors and do not place much emphasis on the long-term outlook and development of the energy company. EU rules must likewise be met.

The emphasis on the role of the nuclear regulator, in Dana Drábová's excellent speech, was highly beneficial. The independence and standard of nuclear safety in Czechia have a very good reputation internationally as well. It is necessary for it to retain its qualities in the future. As its responsibilities grow, the capacity of this office will also need to be strengthened, and it is good that the state is clearly aware of this.

Although the conference itself was about nuclear power, most speakers stressed that the overall energy strategy and a balanced mix are crucial. In this respect, it is also necessary to address support for and the integration of renewable energy sources, which have an irreplaceable role in it. It is good that the key players realise that no single source will save us, and that a balanced mix of energy sources suited to our geographical and other conditions needs to be ensured.

At the same time, speakers stressed that the first units will replace the ageing Dukovany units, but that further units must also be planned to gradually replace some of the coal-fired power plants being shut down. The first units built will most likely be large Generation III+ units, but later ones could also be small modular reactors, which could be used not only to generate electricity but also for district heating. They should already be available in the early 2030s.

It is true that, so far, these are verbal declarations, and only the coming months will show how the declarations are implemented. Naturally, it has not yet been possible to say exactly what the agreement between the state and ČEZ, the tender format, the reactor model or the resulting electricity price will look like. Daniel Beneš and Jaroslav Míl explicitly state that the model will be aimed at meeting the state's strategic needs. Through the financing method, the price from Hinkley Point C, which is around 100 EUR/MWh, will be reduced by 50 EUR/MWh to the Paks price of 50 EUR/MWh. I described the impact of the chosen model on the price of electricity from the facility in greater detail in this article.

In the afternoon, the individual potential suppliers presented their offers at the forum. They were Russia's Rosatom, China's CGN, France's EDF and Framatome, Atmea (France and Japan), Westinghouse (the US and Canada), and KEPCO (South Korea). The individual reactors are described in more detail in this article (here and here).

Only the future will show how specifically political representatives and managers implement the plans outlined, whether construction gets under way and how it will be carried out. At least in my view, the International Energy Forum held in the Chamber of Deputies could be counted, at a minimum, among the positive signals pointing in the right direction.