PR:National Action Plan for the further development of nuclear energy in the Czech Republic

JOINT PRESS RELEASE 

Hnutí DUHA – FoE Czech repubulic, Calla – Association for Preservation of the Environment, and the Alliance for Energy Self-Sufficiency

27. March 2015

Czech Minister of Industry is setting a nuclear trap for Czech citizens and future governments
The Ministry of Industry and Trade of the Czech Republic (MTI) has prepared a National Action Plan for the Development of Nuclear Energy in the Czech Republic; the government should approve this document along with the Updated State Energy Policy during the first half of 2015. The projects outlined in this plan will be financed solely by CEZ until 2025, when the future Czech government will decide about subsidizing this project. Future subsidies for expanding the Temelín nuclear power plant by building two new reactors could cost Czech consumers up to one trillion Czech crowns (€37 billion; according to an independent analysis conducted by Candole Partners).

In the nuclear plan, Minister of Trade and Industry Jan Mládek proposes commencing preparations for building two new reactors at Temelín and two at Dukovany. At the same time, however, making the critical and controversial decision about how this project should be financed - that is, the decision about the form and amount of necessary guarantees for the investor, which will be paid for by electricity consumers and tax payers - has been postponed until 2025. By that time, however, Minister Mládek proposes that 32 billion Czech crowns (€1,2 billion) be spent on preparing and gaining permits for these two money-losing projects.

Although the MTI has accepted some of the Alliance for Energy Self-Sufficiency's and Calla's criticisms of the fundamental flaws in this draft plan (e.g., by adjusting erroneous LCOE calculations and liability limits for nuclear damage, and by supplying more information about the costs for building nuclear power plants based on experience elsewhere in the world), it still contains many problems.

In the atomic plan, Minister Jan Mládek allows for subsides for new reactors in the form of a Contracts for Difference subsidy scheme or by drawing from the state budget. He references the construction of reactors in the United Kingdom that have been permitted by the European Commission. However, the model the MTI uses for calculating the potential future financial burden on consumers and the state budget incorporates underestimated investment costs for these new reactors. The MTI's assumption of a price of 4,500 EUR/kW for new reactors is very far off the mark; real prices range between 6,000 and 9,750 EUR/kW.

Candole Partners, an independent consulting firm, has analyzed the possible impacts on consumers [1]. Their report states that if “the subsidy awarded to CEZ is €108/MWh (in 2013 prices) for 35 years, the total annual subsidy payment from consumers to CEZ would approach €1 billion.” This scenario means that if CEZ needs support for the construction of more nuclear reactors similar to that provided in the United Kingdom - that is, a guaranteed floor price for 35 years - the subsidies that CEZ would receive as a dominant investor would approach one trillion Czech crowns (€37 billion).

Although Minister of Industry Jan Mládek has put off making the decision about awarding subsidies for ten years from now, he already wants to begin taking steps towards building new reactors. This situation may lead future governments into a literal nuclear trap.

“The Ministry of Trade should finally take off the rose-tinted glasses it uses to look at nuclear energy. Unfinished atomic power plants all over the world are clear indicators that nuclear reactors aren't cheap toys; they cost hundreds of billions, money that comes from state subsidies. There is a real threat that Czech consumers will have to pay up to one trillion Czech crowns in the future for more nuclear reactors. The government has to stop work on this plan and bring the entire process of preparing the construction of new reactors back to the beginning,” says Martin Sedlák of the Alliance for Energy Self-Sufficiency.

Karel Polanecký of Hnutí DUHA adds: “The authors of this draft plan for support for new reactors in the Czech Republic are mainly considering copying the British model of guaranteed prices. The assumption that they will be able to negotiate better prices than the British is, however, exaggeratedly optimistic. The British government guarantees a price of 126 EUR/MWh with an annual increase based on inflation. Actual market prices are around 35 EUR/MWh. That is a pretty high price to pay for being enthusiastic about nuclear energy.”

The MTI has partially accepted our comment to adjust the overly low limit set on the liability of nuclear reactor operators (CEZ is the only such company in the Czech Republic) for nuclear damages in the event of a nuclear accident. Even though the liability has been increased to 9 billion Czech crowns (€333 milion), CEZ’s liability for any future damages is still very low

“Many other EU countries have set higher limits for financial liability, such as Sweden, Spain, Belgium, and the Netherlands. Germany requires 2.5 billion EUR security, that is, more than 60 billion Czech crowns. Limiting liability can also be understood as a form of indirect state support for nuclear reactor operators,” warns Edvard Sequens of Cally.

In reality, damages inflicted by a serious accident involving atomic reactors can reach astronomical sums. The costs of Fukushima are estimated to be 4.3 trillion Czech crowns (€150 billion) [2] whereas as Chernobyl inflicted 4.6 trillion Czech crowns (€170 billion) of damage [3]. IRSN, the French state institute for nuclear safety, has estimated that the damages of a possible accident at a French nuclear power plant could reach 10.9 trillion Czech crowns (€430 billion).

The MTI has long avoided making an objective comparison of the costs of building new nuclear reactors with the costs of other sources of energy. However, Agora, a German think-tank, provides such a comparison in a fresh study [4]; according to this analysis, the price of solar energy will decrease in the coming decade by one-third, and over the long-term (until 2050), it is expected to drop by two-thirds. Thus, within ten years solar energy should become the most inexpensive source of electricity on the planet. It will beat out coal-based and atomic energy; according to this study, electricity from new coal and gas-fired power plants today costs between 50 and 100 EUR per MWh whereas prices exceed 110 EUR for new nuclear power plants.

Contacts:
 * Martin Sedlák, Alliance for Energy Self-Sufficiency, [mailto:martinDOTsedlakATaliesDOTcz martin DOT sedlak AT alies DOT cz], http://www.alies.cz
 * Karel Polanecký, Hnutí DUHA, [mailto:karelDOTpolaneckyAThnutiduhaDOTcz karel DOT polanecky AT hnutiduha DOT cz], http://www.hnutiduha.cz
 * Edvard Sequens, Calla, [mailto:edvardDOTsequensATcallaDOTcz edvard DOT sequens AT calla DOT cz], http://www.calla.cz

For more information:
 * 1) http://www.candole.com/files/Temelinomics%202.pdf 
 * 2) FY2020 Nuclear Generating Cost Treble Pre-Accident Level – Huge Price Tag on Fukushima Accident Cleanup, Tatsuo Kobayashi, Senior Economist, Japan Center for Economic Research, http://www.jcer.or.jp/eng/research/pdf/pe%28kobayashi20110719%29e.pdf 
 * 3) Chernobyl’s Legacy: Health, Environmental and Socio-economic Impacts and Recommendations to the Governments of Belarus, the Russian Federation and Ukraine, The Chernobyl Forum: 2003–2005, https://www.iaea.org/sites/default/files/chernobyl.pdf 
 * 4) http://www.agora-energiewende.org/topics/optimisation-of-the-overall-system/detail-view/article/solar-energy-emerging-as-cheapest-power-source-in-many-parts-of-the-world/ 