Wednesday, 16 April 2014

Respekt: Gov't backs Temelín expansion despite doubts

13 February 2013

Prague, Feb 12 (CTK) - The Czech government presents the planned extension of the Temelin nuclear power plant as the main pillar of the future Czech energy policy, but more and more voices challenge the enormously expensive project, Marek Svehla has written in the latest issue of weekly Respekt.

Even the CEZ state-run power utility that operates Temelin expresses doubts about the building of two new blocks. The government wants to choose the builder this year, Svehla says.

He recalls that CEZ director general Daniel Benes told daily Hospodarske noviny last December that Temelin cannot pay without a state subsidy.

Experts disagree on how much the energy produced in the new Temelin units would cost, but it is clear that it would be markedly more than the price currently paid for energy on the market. Some estimates say it might be two times the current market price, Svehla says.

This would mean that CEZ would have to subsidise Temelin's operation with about 15 billion crowns or even more might be necessary every year. CEZ chief Benes said he would want the state to cover these costs, Svehla notes.

The bidders in the tender for the construction of the third and fourth Temelin units, whose estimated value is 200-300 billion crowns, are the Czech-Russian consortium of Skoda JS, Atomstroyexport and Gidropress, the U.S.-Japanese company Westinghouse and France's Areva. CEZ excluded Areva from the tender, but Areva appealed the decision.

Svehla says Czech nuclear energy has always been accompanied with unclear costs of construction and operation of the plants. The state has always helped nuclear energy with various hidden subsidies, for the construction, state supervision, protection or finding a nuclear waste repository.

Deputy Industry and Trade Minister Pavel Solc is not against the state guarantee of fixed energy prices for CEZ.

But if CEZ does not want to make money in Temelin, who is pushing through the plant's extension and why? Svehla asks.

The Industry and Trade Ministry wants to maintain Czech energy exports and it underestimates the long-term potential of savings and alternatives, Svehla writes.

Solc says the government has no right to halt or postpone the Temelin tender because CEZ declared it. But CEZ must declare the tender because the state energy concept orders it, Svehla quotes CEZ spokesman Martin Kriz as saying.

The Industry and Trade Ministry worked out an outlook for the next 30 years in 2012. This outlook predicts that the consumption and prices of energy will be growing, which means that the Czech Republic will need to produce more energy. Temelin's extension is a good way of securing enough energy even for exports, the report says according to Svehla.

"We should promise enormous subsidies (to nuclear power) but even now we are in a situation where the whole production of Temelin is exported," said Michal Snobr, analytist of the J&T financial group.

Snobr says the assumption that the price of energy will be growing is wrong. "(Energy) consumption will not significantly grow because one of the EU goals by 2020 is effectiveness and savings. The model that CEZ presents is untrue," he adds.

Svehla says CEZ as the Czech majority power utility has to sell energy on the market for prices that are profitable for power produced in old coal or nuclear plants but definitely not for newly built plants, nuclear or other.

Czech politicians unofficially admit that the government of Petr Necas (Civic Democrats, ODS) wants to decide on the tender because a high number of small orders for Czech firms are connected with it and the ODS, which is likely to move to opposition in 2014, does not want to let president-elect Milos Zeman influence these orders, Svehla writes.

He says the Czech government reports always consider nuclear energy the best and cheapest way of power production, yet the situation on the energy market has completely changed within a single year. The situation in Europe and especially in Germany has radically changed, he points out.

The European Union has been liberalising the energy market since the 1990s and it decided to subsidise expensive but perspective renewable energy resources at the same time. As a result, the expensive energy generated from the sun, wind and biofuel began to be bought and used preferentially. This system did not attract very much attention for some time because only a tiny portion of the energy was green, Svehla says.

But then Germany made a U-turn in its energy policy when the socialist and green parties ruled the country, approving the "Energiewende" under which all German nuke plants should close down and green energy should play a markedly bigger role.

The right-wing government of Angela Merkel that took power in 2005 was expected to remove the enthusiasm for renewable sources, but the very opposite occurred after the Japanese nuclear disaster in Fukushima in spring 2011. Merkel then confirmed the plan to close all German nuke plants by 2022 and massively invest in renewable resources, Svehla writes.

Irrespective of whether one considers the German plan admirable or nonsensical, this plan has a strong influence on the Central European energy market. As German power distribution companies must buy green energy as a priority, energy prices have been falling for two years in the whole region, he says.

Many experts believe that the prices of green energy will be falling thanks to new technologies. Energy produced by wind turbines at sea can compete on the market without any subsidies even now and energy from the sun is expected to be competitive within five years, Svehla writes.

Countries that depend on German energy prices, including the Czech Republic, must reckon with the fact that the developments on the energy market cannot be predicted and it cannot be said whether energy prices will go up in near future, Svehla says.

($1=18.849 crowns)

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