Energy of the Future? Nuclear energy in Central and Eastern Europe

Energy of the Future? Nuclear energy in Central and Eastern Europe

Jul 09, 2014 by Karel Polanecký, Jan Haverkamp
Heinrich Böll Foundation
pdf
Place of Publication: Praha
Date of Publication: 2011
Number of Pages: 55
License: All rights reserved.
Language of Publication: English

The Czech Republic, Slovakia, Poland, Hungary and Bulgaria have much in common. In the second
half of the 20th century they were part of the Socialist Bloc dominated by the Soviet Union and, as
members of the Comecon (Council for Mutual Economic Assistance), also a distribution market for
Soviet industrial production. In all of these countries – with the exception of Poland – nuclear power
plants were built during the 1970s and 1980s using the Soviet technology of the time. Specialists were
also trained in the Soviet Union, and upon their return these individuals formed the basis of the nuclear
intelligentsia. In all five countries the electricity sectors were controlled by state monopolies. After the collapse of the socialist system these monopolies were transformed into companies of various kinds, but the governments kept their majority stakes in them. The Czech Republic’s ČEZ, Poland’s PGE, Hungary’s MVM, Bulgaria’s NEK and Slovakia’s Slovenské elektrárne had no difficulty maintaining their dominant positions, which were not even threatened by the market liberalisation which followed EU accession. Competition could not challenge the transformed monopolies due to their exceptional starting position, and proponents of nuclear energy have maintained significant influence at all of these companies. Only in Slovakia was the successor company to the socialist monopoly privatised. A majority stake in Slovenské elektrárne was sold to the Enel concern in 2006. However, the Slovak government privatised the company on condition that participants in the tender would continue with nuclear projects. In all the countries, dominant energy companies were able to establish close cooperation with the ministries responsible for developing the sector. These companies do not adapt their plans to governmental conceptual programmes; to the contrary, ministries often create the conditions for projects proposed by company managers. Thus, in the name of energy security, state officials are actively implementing construction of nuclear power plants based on plans which – in most cases – date from the 1980s. In constructing nuclear power plants, officials of the individual dominant energy companies see an opportunity to maintain their privileged position on national markets. Coal-fired power plants will face increased costs in the coming years due to the need to purchase emissions allowances, and coal extraction in the region is declining. Not one of these companies has attempted to base a significant portion of its business on decentralised production using renewable energy sources. Building nuclear power plants is the last theoretical possibility for the former monopolies to maintain their predominance over the competition and control of the market.

Nuclear plants over energy plans
In none of the five countries investigated was the decision to build a nuclear power plant made based
on an energy plan evaluating the expediency of various alternatives, including non-nuclear ones. In
Poland, the government decided to construct a nuclear power plant even though the energy plan did not
recommend it. In Bulgaria, the state energy plan is supplanted by an overview of projects proposed by
large investors. In Hungary, parliament approved a change to the energy plan which conditioned the
construction of new reactors on shutting down old ones, but without requesting that various alternatives
be presented and without evaluating the economic aspects of such a plan. The Slovak government
adopted a strategic plan to develop the energy sector without a broader expert debate or an assessment
of alternatives; rather, it approved the only proposal based on further nuclear development. While in
the past the Czech government has included a comparison of various scenarios in the preparation of its
energy plan, an elaborated non-nuclear alternative based on energy efficiency and renewable sources
was not taken into consideration in its most recent such plan.

The nuclear zeal of political elites
In all the countries of Central and Eastern Europe we find high-level politicians vigorously promoting
the development of nuclear energy. The countries differ only in their respective nuclear industries’ moti-
vations and the ways in which they win over their proponents. In the Czech Republic it is no surprise to
anyone that important ministerial posts are filled by individuals whose past is connected with ČEZ. An
influential energy adviser to Slovakia’s PM headed a company which profits from the construction of
nuclear power plants. Bulgaria’s president and ministers in various governments do not conceal their
personal contacts with representatives of the Russian nuclear industry. In Hungary, MVM managed
to win the favour of both key political parties, and parliament approved the construction of new units
at the Paks Nuclear Power Plant according to a submission from this company without any economic
estimates or costing information. The region lacks a strong political party advocating a non-nuclear
alternative for developing the energy sector, although public opinion polls indicate that there is presently
no public demand for such a programme.

Strong words will not pay for a reactor
The strong political support which nuclear energy enjoys in post-socialist Central Europe does not
guarantee, however, that planned reactors will be built. High investment costs lead to unwillingness
among investors – even strong state-owned companies – to take on all the economic risk. In the
1990s, Central European states still indemnified the construction of nuclear power plants – government
guarantees were provided on the loans which financed construction of the first units at Temelín
and Mochovce. Since EU accession, however, this approach is no longer possible as it would constitute
a violation of the rules for economic competition.
On the EU electricity market, rules must be respected which prohibit the state giving an advantage
to individual producers. Governments cannot provide any benefits to energy companies (state-owned or
private) or selected technologies which could inhibit competition. Accordingly, not even partially stateowned companies can count on subsidies or government loan guarantees for building reactors.
Nevertheless, the examples of the completion of the Mochovce plant in Slovakia and the suspended
Belene project in Bulgaria demonstrate that governments are still attempting to provide indirect support
to nuclear power plants even on the European market. Reducing payments into the fund for the
disposal of spent fuel or increasing the equity of a state-owned company (with the goal of improving
access to loans), however, cannot fundamentally influence projects’ balance sheets. The construction of
new nuclear units in Central and Eastern European countries will depend on whether suppliers submit
an offer that is economically advantageous for ČEZ, MVM or PGE. In view of the results of nuclear
tenders in various parts of the world and the continuously rising costs of the two European plants under
construction, this is not at all certain.

Table of contents:

Preface 6
Summary 7
Part I: Political Support for Nuclear Energy 9
• Czech Republic – ČEZ, Nuclear Power and Political Elites (Karel Polanecký) 9
• Slovakia – Political Pressure to Develop Nuclear Energy (Pavol Široký) 14
• Poland – Nuclear Plans (Zbigniew M. Karaczun) 20
• Hungary – Traces of the Soviet Nuclear Industry (András Perger) 24
• Bulgaria – Energy Policy and Politics (Petko Kovachev, Jan Haverkamp) 28
Part II: Financing the Construction of Nuclear Reactors and Forms of State Support  37
Part III: Basic Data on the Significance of Nuclear Energy in Five States in the Region 47
About the Authors 54