Another of the expert round tables organised by the Prague office of the Heinrich Böll Foundation, this time in cooperation with the Alliance for Energy Independence and Calla, took place on 19 June in the premises of Prague’s Hotel Jasmin. It was devoted to the problematic issue of the economics of nuclear energy, and came only a few weeks after the Czech government adopted its National Action Plan for the Development of Nuclear Energy, thus opening the door to construction of up to four new reactors (two each at Dukovany and Temelín).
As usual, the discussion had an international dimension, which this time consisted of an introductory presentation by Professor Stephen Thomas of the University of Greenwich in Great Britain. Professor Thomas presented the reality of nuclear energy to the meeting’s thirty attendees with the example of the Hinkley Point C project. The British government envisages two Generation III EPR reactors here, each with an output of 1650 MW, which are to be supplied by French energy concern Areva. The reactors are to be built by a consortium led by French state company EdF.
When the project was being prepared, the nuclear industry insisted that no subsidies would be needed, that the new power plant would be competitive on a market with electricity priced at GBP 31-44 / MWh as is the case in gas-powered plants, and that each reactor would cost GBP 2 billion (EUR 2.8 billion). The reality is that the price of the reactor has grown from GBP 2 billion to GBP 8 billion (over EUR 11 billion). The price for the electricity to be produced by these new reactors was guaranteed under a contract for difference between the British government and EdF in the amount of GBP 92.5 / MWh (EUR 127 / MWh), i.e. at double the current price on the British market. The guaranteed price will be in effect for 35 years from when the reactors come online and, moreover, will rise with inflation.
The company British Gas has already backed out of the project. Chinese companies China General Nuclear Power Corp. and China National Nuclear Corp. have expressed interest in a 40% stake in the project, but they are requiring that the French government undertake to provide financial assistance to Areva and assume liability for any cost overruns. Areva, a French state-owned company, has encountered financial difficulties due to unsuccessful ventures, and reported a loss of EUR 4.83 billion in 2014.
Its EPR reactors constructed in Europe clearly demonstrate the adventures upon which investors in additional blocks would be embarking. The prices of both European reactors currently under construction at Olkiluoto (Finland) and Flamanville (France) have risen from EUR 3 billion and EUR 3.2 billion, respectively, to some EUR 8.5 billion each. The Finnish project should have come online in 2009, but now will not be completed before the end of 2018; the French project has encountered similar delays. Moreover, if a safety risk is demonstrated by the material anomalies in the reactor vessel at Flamanville, it could put a definitive end not only to this project, but also to two EPR reactors currently under construction in China (Taishan 1 & 2).
If, despite all this, the Hinkley Point project is ultimately implemented, it will not begin supplying electricity in 2017 as was promised, but in 2023 at the earliest. British plans for ten new reactors with a total combined output of 16,000 MW are now in shambles and just these two reactors remain.
Professor Thomas also addressed the situation elsewhere in the world— starting with China, which has a very ambitious nuclear programme to build 33 reactors. Between 2008 and 2010, construction began on 25 of them, 19 of which have an antiquated design, but they also include the two EPR reactors mentioned above and four delayed Westinghouse AP1000 reactors. Between 2011 and 2015, construction began on another eight reactors, seven of which are the new Chinese CAP1400, Hualong One or ACPR1000 designs, which copy Western models. The big question of how European regulators will react when China offers them for construction remains open.
Even the Russian plan to conclude two to three orders for new reactors annually soon ran out of steam. Domestic projects to build new AES-2006 reactors have encountered delays on the order of three to four years, the Baltic Nuclear Power Plant project has been cancelled, and only two reactors abroad are in the actual construction phase—one in China and one in Belarus. Agreements on the others are in various stages of negotiation. An attempt to involve state-owned Rosatom in the financing is running up against Russia’s economic limitations. In the United States, Watts Bar Nuclear Generating Station Unit 2—construction of which began in 1972 (!)—is nearing completion, and four AP1000 reactors begun in 2013 are now two to three years behind schedule and 20% over budget.
Economist Jan Ondřich from Candole Partners then presented the support models which could be considered in the Czech Republic for building reactors at Dukovany and Temelín. Most likely, this would involve a mix of support consisting of a guaranteed electricity price along the lines of the British model accompanied by loan guarantees, because the cost of capital influences the economics of nuclear power projects significantly. However, even loan guarantees are viewed by the European Commission as impermissible state aid, and thus the Czech Republic would have to obtain an exemption. Perhaps this is why they are not mentioned in the National Action Plan to Develop Nuclear Energy in the Czech Republic, which assumes significantly lower investment costs (EUR 4500 / kW) than what such costs would amount to in reality. Even the scenario that takes account of the impacts of guaranteed prices is very optimistic and rather unrealistic. Electricity prices do not rise so quickly; a major increase in the price of emissions permits cannot be expected, and market prices will also slow the growing share of renewables.
Jan Ondřich also corrected exaggerated prognoses by the Ministry of Industry and Trade regarding future electricity consumption; the excessive pressure of production capacities on demand will influence the future of the European market for a long time. Ondřich gave the interesting example of how RWE’s recent announcement that it would close up to 12 GW of coal-fired power plants in response to a new tax on fossil fuels did not result in any change in energy prices. Ondřich concluded his presentation with a warning of how catastrophic for ČEZ’s economic situation an investment in new reactors would be without some kind of support mechanism. And if the government were to guarantee the price of electricity, this would ultimately be paid for by consumers through higher electricity prices by 10%-15%. If both blocks are built, we would pay ČEZ an additional CZK 35 billion each year.
The final introductory presentation was given by Martin Sedlák of the Alliance for Energy Independence, and consisted of a reminder of how the Czech Republic’s energy plans are developed according to the interests of ČEZ and its politicians. The assertions about an electricity shortage and investment costs which constituted the rationale for constructing the first and second blocks at Temelín never could have come to fruition. Despite this, we are now once again hearing the same arguments for the need for new reactors. Sedlák also demonstrated on specific graphs how markedly ideas about the Czech Republic’s energy future have changed under individual ministers of industry. Do we want to be bamboozled again? If not, it is necessary to return the entire preparatory process for the construction of new reactors to the very beginning and to start developing energy plans based on the realistic costs of individual energy sources.
The debate that followed was expertly moderated by Veronika Sedláčková of Czech Radio, and benefited from the participation of MEP Luděk Niedermayer, former Prime Minister Vladimír Špidla (now serving as chief advisor to Prime Minister Bohuslav Sobotka), Robert Šťastný of ČEZ’s Supervisory Board, Senator Jitka Seitlová and many others. Among other things, the discussion addressed our current possibilities for deciding that we will not make preparations to build new reactors, and outlined the level of political courage that would be required for such a decision. As a recent CVVM poll demonstrates, the Czech government’s plans for new reactors at Dukovany and Temelín are not supported by two-thirds of the public and, moreover, this support is declining—by 12% since 2012. Less than one-fourth of those polled would like to see a greater share of nuclear energy in the Czech Republic’s energy supply, and only six out of one hundred are definitively convinced of this view. People in the Czech Republic are coming to realise that it would be an expensive venture that would ultimately have to be paid for out of their own pockets.
Those present agreed that we are on the verge of an energy revolution where we will no longer need to consume more energy in order to increase GDP. The role of renewables is growing, energy storage technologies are improving rapidly, and development is trending towards decentralisation. We will soon see what kind of future nuclear energy will have.
Translation by Evan Mellander