Chinese and Korean firms eying future Temelín nuclear deal

03-09-2014

Plans to expand the Czech nuclear power plant in Temelín have been put on hold, with a previous tender cancelled over the project’s dubious viability. A Russian-led bid competed with a US-Japanese offer for the multi-billion deal. The Czech government is set to decide by the end of the year whether the project will be revived – and with the Russians now presumably out of the game, Chinese and Korean firms are eyeing the lucrative contract.

Temelín nuclear power plant, photo: Filip JandourekTemelín nuclear power plant, photo: Filip Jandourek The Czech state-run energy utility ČEZ scrapped the tender for the supplier of two new nuclear reactors at the Temelín plant in April. The decision came after the Czech government refused to provide state guarantees for the price of electricity generated by the new units.

That however does not mean the plant’s expansion have been scrapped altogether. The government’s updated national energy strategy is only to be unveiled in the fall but by all accounts, it will continue to heavily rely on nuclear power for decades to come.

A consortium led by Russia’s Atomstroyexport and the US-based firm Westinghouse were the sole bidders in the discontinued tender, after the French company Areva was disqualified. But if the Czech government decides to go ahead with the project, worth around 300 billion crowns or some 15 billion US dollars, several new potential bidders have already expressed interest in taking part.

In July, the Korean government said the state-owned electric firm KEPCO will take part in a new tender. Last week, China’s First Deputy Prime Minister Zhang Gaoli announced in Prague that Chinese firms would also like to participate in the bidding. Czech Industry and Trade Minister Jan Mládek spoke to Czech Radio about the announcement.

“What we heard was a political and economic declaration by Chinese deputy prime minister Zhang Gaoli who said, ‘if you’re going to have a new Temelín tender, we will participate.’

“This coming from deputy Chinese prime minister, I have to take it very seriously. In the case of Korea, it was in fact their government which passed a resolution that the Korean company Kepko will take part in the tender if there is one. So it’s in the sphere of a declaration of interest.”

Chinese companies are building nuclear reactors at home, and have also started targeting opportunities abroad, most recently in the UK, Brazil, and South Africa. But Mr Mládek says that they would still be a long way away from winning the potential contract in the Czech Republic.

Jan Mládek, photo: archive of Ministry of Industry and TradeJan Mládek, photo: archive of Ministry of Industry and Trade “It was the first time I heard about it, too. We’ll be discussing all these issues. Also, the Chinese firms would first have to get all the licences and permits for building a nuclear plant in the European Union which is not entirely easy. But what’s important is that the Chinese clearly declared their interest to take part in the project.”

The news that Korean as well as Chinese firms would like to take part in a future Temelín bidding has been welcomed by senior Czech coalition figures as well as members of the opposition. But some, such as head of the Civic Democrat deputy group in the lower house, Zbyněk Stanjura, have expressed political concerns.

“[The criteria should be] a good price and outstanding quality but at the same time, this must go hand in hand with our efforts to strengthen our country’s energy security. I would therefore welcome if the deal went to a firm based in NATO member state.”

Before these factors come into play, however, the Czech government needs to say whether it will go ahead with the expansion. For the time being, one thing seems to be clear: the Russians are out of the game, according to the Czech Ambassador-At-Large for Energy Security, Václav Bartuška. I spoke to Mr Bartuška and asked him first of all what he thought of the Chinese declarations.

“The Chinese interest is definitely very serious. China has built up a huge industrial potential over the last 15 years to build new nuclear power plants not just in China but also abroad, and it will definitely try to expand abroad as far as it is allowed to. So yes, there is definitely huge Chinese interest to go abroad.”

The Korean government has also expressed their interest in the Temelín project. If the plan goes ahead, will we have Chinese and Koreans competing, instead of Russians and Americans?

“I’m definitely opposed to Russian taking any part in a future expansion of nuclear power plants in my country. Then you have Western companies, Areva of France, the US-Japanese Westinghouse, and there are other Japanese producers as well as the Koreans and Chinese, so the field is wide.”

Václav Bartuška, photo: Till JanzerVáclav Bartuška, photo: Till Janzer One Czech opposition leader suggested only firms based in NATO countries should be allowed to bid for the project. What do you think of this argument?

“There is really no need to discuss such details at this moment. I think that what really makes sense is to say clearly and loudly that Russians will not be allowed under any circumstances to take part in the project. As for the other countries, I would not really set any limits at this moment.”

If we look at the Czech government’s plans, what has changed since April that would make the project profitable?

“What’s happening in Europe now is that no new power plants – coal, gas or nuclear – make any commercial sense without price guarantees. It simply doesn’t make sense because due to huge subsidies for renewable sources of energy, electricity prices have gone done so much that no new project makes any commercial sense.

“At the same time, Europe is aware that it will have to rebuild about one third of its capacity over the next 20 years because power plants are ageing and they will be phased out.”

“So there is a real need to build new power plants and at the same time, there is no financial sense in it because of the subsidies for renewables. This has to be addressed somehow, and you need politicians brave enough to say some unpalatable truths to the public.”

What truths do you mean?

“Exactly what the British government is doing, telling the British public that no matter how much they don’t like it, they will need new power stations and these will have to be built under guaranteed price schemes. That’s what the British government is doing right now.

“Something similar is going on in Finland and other places. But in most European countries, the governments are simply postponing this unpleasant task.”

The Czech state-controlled energy firm ČEZ is looking to buy the Slovak energy utility which operates two nuclear plants. If the deal materializes, will it change the need for new reactors in the Czech Republic?

“First of all, let’s see if the deal really goes through because there are some big issues with that plan. But Slovakia now has an electricity deficit, and even after the two blocks at Mochovce are finished after more than two decades of construction, the country will not be fully sufficient. So it would not change much in how we think of the Czech energy future.”

Temelín nuclear power plant, photo: archive of ČEZTemelín nuclear power plant, photo: archive of ČEZ Do you think the strong emphasis on the energy security due to the dramatically changing international environment will play a role in the government’s decision on Temelín expansion?

“I again don’t want to speak for the government. But the environment around us has certainly changed dramatically. The only treaty with any value is now NATO’s Washington Treaty. Everything else – from the UN Charter to the Helsinki Final Act – is just a piece of paper with no value.

“There is no other guarantee for the Czech Republic or other central European countries for surviving this new storm which will definitely go away in a week or two. And that will certainly change the thinking in Prague and other European capitals.”

03-09-2014