Czech Premier willing to breach EU law to build new reactors

22 October 2019

The Czech Republic will have to build new NPPs to replace ageing coal and nuclear capacity even if this means breaching European law, Prime Minister Andrej Babis told the European committee of the lower house of parliament on 16 October. “Energy security is our priority and there is no way around it.” Power utility CEZ, which is 70% state-owned, has said it plans to phase out its coal-fired power plants by 2040 when only its newest lignite power station would remain operational. The government wants CEZ to be responsible for the new nuclear projects, but CEZ is insisting on state guarantees to ensure that the plants would be both viable and deliver returns to shareholders. This is now under discussion, with the government saying only that it would cover the risks of regulatory and legal changes that might complicate construction and operations.  Some minority shareholders at CEZ believe a nuclear newbuild programme would affect dividends is CEZ finances construction from its own sources.

Currently the two NPPs at Dukovany and Temelin provide about 38% of the Czech electricity needs. The government is pressing CEZ to first build one reactor at Dukovany, to replace reactors due to be shut down after 2035, while a second reactor could follow at Temelin. CEZ cancelled a previous tender to build a new unit at Temelin in 2014 after the previous government refused to provide state guarantees.

To date six companies have expressed interest in building the next unit – Korea Hydro and Nuclear Power,  Russia state nuclear corporation Rosatom, France’s EDF, US-based Westinghouse, the Atmea consortium (Mitsubishi Heavy Industries and EDF, which has now been taken over by EDF, and China General Nuclear corporation.

Previously, two NPP projects were considered to be at risk of breaching European laws prohibiting state aid - the Hinkley Point C NPP, which is being built in the UK by EDF, and Hungary’s Paks NPP being built by Rosatom. However, in both cases the European Commission decided that no laws were broken. In both cases, Austria challenged the decision before the EU Court of Justice. The court confirmed the Commission's decision on Hinkley Point last year while the Paks case is still pending. Austrian politicians made it clear in September that they would considering bringing an action for illegal state aid against the Czech Republic if it is decided to build a new unit at Dukovany.



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