Dukovany timetable changes: key contracts to be signed later

The Ministry of Industry and Trade has agreed with ČEZ to adjust the timetable for signing the key contracts needed to complete the fifth unit of the Dukovany nuclear power plant. The second implementation agreement and the electricity purchase agreement are to be signed three months later.

ČEZ and the Ministry of Industry and Trade have already signed several contracts setting out how the project will be carried out. These contracts include, among other things, a so-called sale option, which is intended to ensure that ČEZ sells the project company Elektrárna Dukovany II, a. s. to the Czech state once predetermined conditions are met.

One condition of the sale is that the second implementation agreement and the electricity purchase agreement must be signed by a specified date. Until recently, these agreements had to be concluded by the end of this February. However, under the new date in the contract, the deadline has been pushed back until the end of May. Information on the signing of Amendment No. 5 was published in the contract register.

The deadlines for concluding these agreements have now been extended for the third time. The original wording of the contract envisaged that both agreements would be signed as early as 28 June 2024. Had this not happened, the sale option was to have been exercised, meaning the transfer of the project company to the state. The deadlines were subsequently extended to the end of 2024 and then to the end of February this year.

As can be seen, although the sale option is part of the agreement between ČEZ and the Ministry of Industry and Trade, the contract was amended each time before it could potentially be activated. As a result, no transfer to the state took place.

Both agreements are crucial for the project. The purchase agreement will be concluded for at least 30 years of the plant's operation, but very likely for its entire operating life. This agreement will set the terms under which the state purchases electricity from ČEZ, including the electricity strike price.

The price of electricity from new nuclear units

The price of electricity generated by the new Dukovany nuclear unit will be closely watched. While the project initially assumed prices in the range of 50-60 EUR/MWh, by the middle of last year 90 EUR/MWh was already being discussed. This is only slightly lower than the price at which electricity is currently traded on the wholesale market under next-year contracts.

It is difficult to estimate what price will appear in the purchase agreement for the new Dukovany unit. A comparison with the UK's Hinkley Point C project, for which the electricity purchase price is known, suggests a higher price instead.

For the British project, a Contract for Difference was concluded at 92.5 British pounds per MWh at 2012 prices. For 2022, the price was estimated at 128 pounds per MWh generated due to inflation. At today's exchange rate, this would amount to at least 155 EUR/MWh, while the plant is still not complete. Its first MWh of generation will therefore in reality be somewhat more expensive.

Support for the new Dukovany unit is different, however. Construction costs should be reduced primarily through favourable financing, which forms part of Czech state support. The component of the purchase price related to financing costs accounts for as much as 67% of the total amount in the case of Hinkley Point C.
The purchase price for the new Dukovany units will depend to a large extent on the agreement between KHNP and ČEZ, as well as on the terms of the state-aid notification. Although it was approved last year, the full text of the notification is still not available on the European Commission's website.