Czech energy strategy as seen by the new industry and trade minister

Seznam has published a fairly extensive interview with Věslav Michalík, the future minister of industry and trade. It fully confirms that the future coalition has neither prepared nor discussed energy policy and an energy strategy. It is only now beginning to clarify them. This therefore means another dramatic delay in addressing energy issues. In his earlier statements, the future minister clearly expressed the view that we do not need new large nuclear units, and changed that view only under the impact of this autumn. Although that lesson has apparently not yet been forceful enough.

Even now, he is not considering replacing coal with nuclear power at all, but solely building combined-cycle gas-fired units for that purpose. In the interview, he says he will reassess the current path towards a tender for the first unit at Dukovany. He is considering a complete change to the financial model and possible construction without the participation of ČEZ. It should be recalled that cancelling preparations for the tender, for which the three invited companies have already prepared initial documentation, would probably have very dramatic consequences. By cancelling a second tender, the Czech Republic would become a truly very unreliable partner. At the same time, it is very difficult to assume that developing an entirely new financial model and changing the construction implementer could proceed quickly enough for any final decision to be made during this electoral term. A delay longer than five years is more likely.

That Věslav Michalík is fully aware of this also follows from his emphasis on using the new unit at Dukovany solely to replace the old Dukovany units. He says there is plenty of time and no need to hurry, because the old Dukovany plant will operate until 2045, so postponement by even several years does not matter. However, he conceals several key facts. It is questionable whether Austria and Germany will allow us to operate this plant for so long. At the same time, his claim that a new unit at Dukovany cannot help us replace coal-fired units is untrue. If the new unit were built under the current assumptions, it could operate alongside the old units and replace coal-fired units. If work were started on building further nuclear units at Temelín, coal could be replaced by nuclear power. In any case, it would help us replace coal-fired units, at least for a certain period.

Věslav Michalík's main justification for why ČEZ should not build the new unit is the notion that it would sell the electricity generated by the new unit on the European exchange, meaning the new unit would not contribute to reducing prices at home. However, if I am not mistaken, the current financial model assumes that the state will purchase electricity from the new unit at a fixed price through a specially established company. I therefore see the current raising of the issue of cancelling the tender process rather as a continuation of manoeuvres that lead to constantly postponing construction, so that politicians do not have to address it during the given electoral term and ultimately ensure that no nuclear power is built at all. Let us recall that the new minister has always advocated against building new large units. This is also reflected in the fact that he is raising this issue without setting goals within the coalition, even though he knows that merely considering abandoning the tender process could do us great harm with potential suppliers.

He thus envisions replacing coal-fired units with large combined-cycle gas-fired units and intensive construction of photovoltaic and wind generation using European subsidies. This, however, is copying the German path, which leads to several dramatic problems. Weather conditions in Germany are mostly the same as here. So, during windy and sunny periods, there will be huge electricity surpluses here. Through its agreement with Russia and construction of Nord Stream II, Germany has secured gas supplies at a lower price than we have here. At the same time, it is difficult to assume that gas prices will be low in a situation where everyone is switching to gas and its consumption in Europe is rising dramatically. The future minister no longer addresses how to secure sufficient gas at reasonable prices.

Let us recall that in reality, once methane emissions from natural gas extraction and transport are included, electricity generation using gas-fired power plants is no better from the perspective of greenhouse-gas emissions than coal-fired generation. The new minister assumes that we will move away from coal sooner for economic reasons. According to him, coal-fired power plants will be pushed out by gas-fired generation because of the price of emissions allowances. However, this may not happen. At the current gas price, the price of emissions allowances would have to be several times higher than it is now for gas-fired units to push out our domestic coal. And personally, I do not think gas prices will fall all that dramatically in the coming years either, given the expected rise in consumption.

There is also a major question over what will happen to young people's willingness to enter nuclear fields and to Czech companies in the nuclear industry if the new minister cancels any construction of new nuclear units here. It is enough for him to postpone them by a number of years or decades. Věslav Michalík has always opposed the construction of large nuclear units and indicated that he would favour the use of small modular reactors. However, let us recall that commercial small modular reactors are unlikely to be available before the 2030s. Only then will it be possible to select one and begin licensing it for construction here. So we need to wait at least ten years, and more likely longer, before preparations to build them here can begin. Exactly when and under what conditions this will happen remains a truly open question.

I do not know whether the ideas in the new minister's interview constitute the energy strategy of the new coalition government. I have doubts; I rather think that the new coalition has no idea yet about a Czech energy strategy. The exception is drawing European Union subsidies for renewable energy sources. However, if the minister's vision of a transition to combined-cycle gas and renewables without nuclear power really is the new government's energy strategy, then in light of current developments in gas and energy prices, it will be quite a disaster. It appears that the destruction of our nuclear energy sector, and of the energy sector in general, at the hands of our politicians will be completed by a graduate of the Faculty of Nuclear Sciences and Physical Engineering. Perhaps I am wrong, but in my view a transition to low-emission energy is simply not possible without nuclear power. Whether I am right will be seen in a comparison of Germany, which chose a path towards a mix of combined-cycle gas and renewables, and France, which is pursuing a path towards a combination of nuclear power and renewables. It will also be seen in a comparison of Czechia, which the new minister plans to lead down Germany's path of building combined-cycle gas-fired units, and Hungary, Slovakia and Finland, which have decided to build new large nuclear units.