Czechs ready to discuss nuclear expansion plans as Austria threatens lawsuit

By bne IntelliNews May 27, 2015

bne IntelliNews -

 

The Czech government is ready to discuss with Austria its plan to build new nuclear reactors after Vienna threatened to file a lawsuit over the projects, Czech Industry and Trade Minister Jan Mladek said on May 26.

The Czech Republic revealed in late May that it is planning to build two units at each of its nuclear plants – Dukovany and Temelin. Both are close to the border with nuclear-free Austria, which has long opposed its neighbour's nuclear installations.

Austrian Environment Minister Andrae Rupprechter said on May 26 that new nuclear units can only be built with state support, such as the government-guaranteed energy prices. If the Czech government approves state guarantees for the project, Austria will challenge that at the European Court of Justice, Rupprechter said.

Austria is already preparing to file a lawsuit against the European Commission’s decision to allow the UK to provide state subsidies for the construction of Hinkley Point C nuclear power plant. Brussels' support for the British plan has been heralded as a blueprint for the building of nuclear plants across Europe.

Speaking at the European Nuclear Forum in Prague, Mladek said he would meet his Austrian counterpart to discuss the issue on June 1. "We will be explaining things and we will negotiate," Mladek said, according to CTK.

The Czech government has so far insisted it remains opposed to providing state subsidies or guarantees for the new units. This was the reason CEZ - the majority state-owned power utility that operates the two plants - cited last year when it scrapped an €11bn international tender to build two new units at Temelin.

However, the "contract for difference" funding model on Hinkley Point C opens the way for state guarantees on the price at which power produced by the plants is bought. Prague has said it wants CEZ to find suppliers that will also join as minority investors to build the facilities, yet with European power markets on the floor, as the Austrian official notes, enthusiasm to put billions into the plants without state support seems unlikely.

That leaves the Czech government in a tight spot, which will not be helped by the Austrian challenge. Czech Prime Minister Bohuslav Sobotka said recently that the first unit would be built at Dukovany and the tender for selecting a supplier will be announced before the end of 2016.

The Czech Republic's two nuclear plants currently run a total of six reactors that generate a third of the country’s electricity. That share is to increase to 50% by 2040, according to the government's recently approved long-term energy strategy. The document calls for an increase in nuclear capacity to make the country more energy independent, with its ageing coal-burning plants set to eventually close as lignite supplies dwindle.

However, enthusiasm in the region has waned in the wake of the Fukushima disaster in Japan, with Germany pledging to shut all of its nuclear power facilities. With that in mind, a report from the International Atomic Energy Agency (IAEA) released on May 26 showing CEZ has failed to rectify issues surrounding its nuclear division will not go down well with the neighbours.

Having just completed an assessment of how CEZ has followed up on safety recommendations issued during an earlier review conducted in October, the IEAE found that just six of the nine issues noted in the earlier inspection have been fully addressed. 

The team recommended further work on a more consistent management approach at all levels of the organisation; temporary changes to power plant equipment should be managed in a unified manner with ambitious targets; and all design requirements for plant systems should be controlled in a unified manner. 

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