Poland delays construction of first nuclear plant by 5 years

By bne IntelliNews February 14, 2012

Bogdan Turek in Warsaw -

Beset by organisational problems and public opposition, Poland's largest energy producer, PGE, announced Monday, February 14 that it was delaying the construction of the country's first nuclear power station by five years. Experts said the economics were never realistic and doubts had even begun to be voiced within government.

"The PGE supervisory board updated its power policy for 2012 to 2035," said a PGE company statement. "Due to a change in the power policy, the first nuclear plant, with a capacity of 3,000 MW, will be commissioned in 2025 and the second one with the same capacity in 2029."

PGE was assigned by the Polish government in 2008 to build the two plants. Both the government and PGE constantly repeated that the 2020 schedule for the first plant could be met and the second one would be commissioned in 2022.

But this was always considered doubtful, and earlier this month Hanna Trojanowska, the government official in charge of nuclear power, suggested that Poland might change the schedule due to international and domestic economic and political changes. Trojanowska said that the types of the reactors to be offered have different periods of installation time. Additionally, the tender to purchase them has been delayed by one year and there is no specific date when it might take place. "An analysis of the offers will tell the investor what are the real-time possibilities for the commissioning of the first Polish nuclear plant," Trojanowska said.

Canada's Lavalin, France's Areva/EDF, Franco-Japanese ATMEA, American-Japanese GE Hitachi, Korea's KEPCO, Japan's Mitsubishi and American-Japanese Westinghouse Toshiba have tendered for the project.

Adam Rozwadowski, director of the Polish Areva branch, said that he is concerned by the delay. "We would prefer the tender to be announced faster and we are waiting," he said in a statement. "We understand the reasons of the delay."

Rozwadowski said the delay could be linked with organisational changes in the management of PGE, which has not yet selected a replacement for CEO Tomasz Zadroga, who resigned in December.

Economic fallout

Economic experts say that the delay in building the plants may have serious consequences for the economy. The first plant was expected to generate 12% of the country's electricity in 2025 and following the commissioning of the second one, the total output of electricity from both plants was to be around 36% in 2030. "There is a growing risk of a shortage of electricity in the future without the two nuclear projects if new conventional-type power plants are not built," Rafal Hajduk, an energy expert in the Norton Rose consulting office, says. "There could be blackouts in extreme cases."

There has also been a delay in the formation of the international consortium to build the two facilities, and tenders to choose the so-called "Owner's Engineer" and legal advisor are still underway. PGE said in its latest statement it wants to have a 75% share in the consortium.

To add to PGE's problems, construction of the first plant was overwhelmingly rejected on Sunday, February 12 in a local referendum held on the Baltic Coast. The referendum office said that 2,237 residents out of a total of 4,200 voted against the proposal to build the plant at a small holiday resort at Gaski near the seaside. Only 125 residents were for the plan. 57% of eligible residents voted, making the referendum valid. Local officials argued the plant would be detrimental for the development of the tourist infrastructure in the area.

PGE has picked Gaski, Choczewo and Zarnowiec, all on the Baltic Coast, as possible construction sites. According to PGE, the company held meetings with local residents in all three places on February 10 to convince them about the economic benefits for the local governments. A meeting in Choczewo went on for five hours. "It was a manifestation [against the plan] without the possibility of a discussion. There was no friendly discussion," PGE said.

Trojanowska speculated that the Gaski referendum will encourage the authorities in Choczewo and Zarnowiec to hold similar referenda, and the results will be taken into account before the final selection of the location is made in 2013. "It is a readable signal that the residents in Gaski do not want the plant," Trojanowska said. "We will start a promotion campaign across Poland in March about the benefits of the construction of nuclear plants in the country."

Katarzyna Klaczynska, a lawyer at CMS Cameron McKenna, said that the referendum results will not persuade the government to retreat from implementing the project. She referred to the law on the construction of nuclear facilities in Poland which says that the final say on the selection of the location belongs to the government. "Local official cannot stop such a project," Klaczynska says.

Some economic experts say that a series of such problems piling up may be nothing as compared with the possibility of the production of shale gas on an industrial scale in Poland. "The biggest danger for the programme is the possibility of finding rich shale gas resources," says Piotr Luba of PricewaterhouseCoopers.

Documenting Poland's shale gas resources should be completed by the end of 2013. "Then the government will have to decide whether nuclear energy program makes sense," Luba says

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