The Czech government has decided to amend its tender for new nuclear to binding offers for up to four reactors, rather than one and invited bids only from Électricité de France (EDF) and Korea Hydro & Nuclear Power (KHNP). The third bidder, Westinghouse, was not included because it "did not meet the necessary conditions".
Prime Minister Fiala said: "During the tender, the non-binding offers showed that the construction of several units – up to four units in one package – even if implemented gradually, is economically significantly more advantageous. “It is also significantly more advantageous than we expected, by up to 25% compared with the construction of only one unit,” he noted.
According to the original tender, power company CEZ’s subsidiary, Elektrárna Dukovany II (EDU II), in October 2023 accepted bids from the three companies for a binding offer for a new fifth unit at the Dukovany NPP as well as non-binding offers for three more reactors. EDU II was to evaluate the bids and report to the Czech government in early in 2024 with the aim of finalising contracts within a year, for construction to start in 2029 and trial operation in 2036. EDF proposed its EPR1200 reactor, Korea Hydro & Nuclear Power proposed its APR1000 and Westinghouse proposed its AP1000. All three companies agreed to work with Czech suppliers if selected.
"From the beginning, the goal of the tender process was to obtain and select the best possible offer for the Czech Republic, both in terms of price, quality and safety of delivery," Fiala noted. The tender will now be expanded to be for binding offers for units 5&6 at Dukovany and units 3&4 at Temelin NPP. KHNP and EDF will now have until 15 April to submit their binding offers and EDU II will report on them to the government by the end of May for a final decision by the end of June.
Four VVER-440 units are currently in operation at the Dukovany site, which began operating between 1985 and 1987. Two VVER-1000 units are in operation at Temelín, which began operation in 2000 and 2002. The Dukovany units will be decommissioned no later than 2045-2047.
According to a lengthy briefing on the government website, the aim of the tender amendment is “to secure a better negotiating position for the negotiation of the construction of additional units, because on the basis of a non-binding offer, the investor cannot demand any liabilities from bidders and would thus risk a disproportionate increase in the project price”. Making the offers binding is important “to achieve the best possible conditions for the Czech Republic and the highest possible level of security regarding the price of construction of additional units”. This step “will also ensure greater transparency”.
The government explained its decision to expand the tender to four units, citing rising electricity demand and plans to close coal-powered plants. However, it added: “It is not yet possible to reveal the exact number of nuclear units that will be needed. Given the required performance, both large reactors in the Dukovany and Temelín nuclear sites and small and medium-sized reactors will undoubtedly be needed.”
On costs, it noted that “economies of scale will make it possible to significantly reduce the average price per unit”. Still to be decided is “the investor model and future relations between the state and CEZ”. Discussion were still underway on the possibility of a state takeover of CEZ but “above all, it is important to ensure that such a step does not lead to a delay in the construction schedule”. On notification of the new plans to the European Commission, the government said “notification of the existing one-unit model will be completed” and for the other units “a discussion on the public support scheme will begin in the coming months”.
As to why Westinghouse was not included in the new tender, the government noted that discussions with Westinghouse had been ongoing for almost five years and “we are very sorry about this fact”. However, “Westinghouse did not meet the key requirements of the tender. Above all, its offer is not binding, which makes it impossible to assess the offer. And then the subject responsible for the quality of the work is not clearly identified. Therefore, the decision is now to address only candidates who submitted a binding offer. At the same time, no one is eliminated, and the tender is not completed until we have signed an EPC contract for the supply and construction of a new unit.”
The government also addressed the dispute between KHNP and Westinghouse, which CEZ considers to be a risk. In September 2023, Westinghouse decided to continue a legal battle against South Korean firms despite a US court dismissing its lawsuit. Westinghouse in October 2022 alleged that Korea’s APR1400 reactors copied the System 80 reactor designed by Combustion Engineering, which was acquired by Westinghouse in 2000. The litigation was a move by Westinghouse to prevent Korean companies from transferring technical information on reactor designs, which it claims have been licensed by it, to Poland and other countries, under a US export control regulation, known as Part 810. Westinghouse insists that the Korean companies using its technologies need to obtain the approval of the US government before exporting them to a third country.
“We are monitoring the development of the dispute. We requested from the applicants and at the same time obtained a certificate of ownership of the rights to the offered technology, both in the safety assessment and in the current offers.” The Czech government noted. “Tender participants had to prove that they are owners and suppliers of nuclear technology. Their APR 1400 project has been licensed in South Korea, the United Arab Emirates, as well as [having] design certification from US nuclear regulators…. Due to the limitations of the Dukovany site, it modified its APR1400 project to a 1000 MWe project (APR1000). Last year, they obtained certification according to the requirements of European operators (the APR1400 project received this certificate as early as 2017).”
The amended tender was also discussed at a follow-up press conference addressed by Prime Minister Petr Fiala, Industry & Trade Minister Josef Síkel, Finance Minister Zbynek Stanjura and CEZ CEO Daniel Beneš. After outlining the details of the amended tender, Fiala noted: “The Czech Republic now has a chance to use its knowledge, capabilities, its long tradition of nuclear energy and become one of the centres of nuclear energy. And the construction of new units at our nuclear power plants is a huge opportunity not only to have enough energy at affordable prices, but it is also a great opportunity for the domestic economy and industry.”
Trade Minister Síkela said the coming years would see “a major transformation of Czech energy”, which “requires us to increase the installed capacity of nuclear power plants”. He cited the advantages of ordering more reactors at the same time. “The price per unit could be reduced by up to 25%, which in practice means that the last fourth reactor would be more or less free at the current proposed prices”. In addition, “a larger order also means more orders for Czech: industry”.
He added: “That is why we approved with government colleagues today that we will ask the bidders of the tender to submit their bids for the construction of more reactors in a binding form.” He confirmed that “the bid submitted by the US-Canadian consortium did not meet the necessary conditions”. In particular, “its offer is not binding and cannot therefore be assessed in a comparable way, so we will continue with Korea Hydro & Nuclear Power Corporation and Électricité de France”.
Finance Minister Zbynek Stanjura said the government's decision was unanimous. He added that, by the end of May, “we will know the exact numbers for the construction of up to four new nuclear units, which will of course improve our negotiating position when we negotiate the final version of the contract with the selected bidder”. However, he stressed that the method of financing that was intended for the construction of Dukovany 5 “cannot be repeated four times”.
The government had, therefore, decided “that we will create a small expert group, where there will be mainly representatives of the Ministry of Finance, the Ministry of Industry & Trade and the future investor, which will submit to the government by the end of this year at the latest a financing model for one to four nuclear units”. He stressed that the new arrangement “will also contribute to greater transparency of the whole competition, and at the same time we hope that the two remaining candidates will really improve their offers”.
CEZ CEO Daniel Beneš said: “Our goal is to get a turnkey delivery with clear guarantees, with a clear price, with clear deadlines, with clear sanctions if those deadlines are not met, and with clear parameters”. On the previous bids he noted: “It is clear from those offers that there is potential for improvement, especially in that, if more of unit are bought” So “from a commercial, strategic point of view for the state, I think it is prudent at the moment to ask those candidates who have made a binding offer for more clarification… so that the government can decide on the preferred bidder by the middle of the year”.
In reply to a question, referring to Westinghouse, Sikela elaborated: “We demanded binding turnkey offers. Applicants have had the tender documentation available sometime since June 2021, and we have always dealt with them on an ongoing basis and pointed out what is key for us. And key for us from the beginning was a turnkey delivery with certain price guarantees and at the same time, say, certain sanctions for non-compliance with contracts, for example for time shifts and so on.” He added: “It is a bit of a surprise that this consortium did not deliver the offer in the required form, but simply from our point of view it was unevaluable.” Finance Minister Stanjura clarified: “We didn't kick anyone out today. We asked the other two candidates for further refinement and improvement of the offer.”
Image: A press conference was held following the announcement (Czech government)