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Czech government moves forward with the nuclear unit in Dukovany

The Czech Government approved two agreements with the majority state-owned power company ČEZ on the framework and implementation of building a new nuclear power plant block in Dukovany. The construction of the new unit is in line with the Czech Republic’s energy strategy that envisages a substantial increase in nuclear capacity by 2040.

The negotiation process between the state and ČEZ has been going on for many months and is already heading to its final phase. The financing model is a crucial element of the project and the government wants to clarify the terms by the end of May before going into talks with the European Commission.

The Minister of Industry, Trade and Transport Karel Havlíček cited difficulties in financing new nuclear projects attributing this to the European Union’s reluctance to consider nuclear power in the category of green investment. He argued that a more inclusive interpretation of clean technologies could alleviate in part the high costs of financing.

Mr Havlíček pointed out that financing involving the state would be cheaper than commercial credit and thus also lower the eventual final power price. The EU regulators could clear state aid for nuclear projects, as it happened in the case of the extension of the Hungarian Paks nuclear power plant but it was met with severe criticism. Prime Minister Andrej Babiš stated before that the Czech Republic “has to push through the nuclear projects, even if in breach of European law.”

ČEZ has demanded before state guarantees that the investment would be both viable and deliver returns to shareholders. Under the terms of the agreement, the company will have the opportunity to sell its nuclear project to the state at various points and a third contract, that is still under preparation, will lay out the conditions under which the state could buy electricity from ČEZ and take the power price risk off the company. This would mean that the state would guarantee ČEZ a price of electricity that could ensure the profitability of the project.

The Czech government gave preliminary approval for Elektrárna Dukovany II, a subsidiary of ČEZ, to build at least one new nuclear power unit last summer. The government’s energy policy, approved by the cabinet in June 2015, foresees one new unit at Dukovany, and possibly three more at the Dukovany and Temelín sites.

At the end of March ČEZ has filed its application to the State Office for Nuclear Safety to construct two new reactors at its Dukovany nuclear power plant each with a generating capacity of up to 1200 megawatts electric (MWe).

The companies interested in building new nuclear units are China General Nuclear, EDF of France, Korea Hydro & Nuclear Power, Russian nuclear giant Rosatom and the US Westinghouse. Under the current schedule, the supplier is to be selected by the end of 2022 and by 2024 contracts could be signed, commissioning is expected in 2036.

The Industry Minister Karel Havlíček emphasised the project will significantly contribute to energy self-sufficiency while also addressing the decline of coal technologies and the EU’s strive for carbon neutrality.

The Czech Republic generates more than a third of its electricity from nuclear energy and the government has advocated nuclear power as a low-carbon alternative to coal, which now produces about one-third of the country’s electricity.

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