CEZ AS, the Czech Republic’s largest power producer, will postpone the expansion of its Temelin nuclear plant as the collapse of the government last month made future energy policy uncertain.
CEZ, originally scheduled to select a supplier of two new reactors by the end of 2013, said it will delay a decision on the $10 billion project by a year. That will allow the new government to update the national energy strategy and negotiate a power-purchase agreement with CEZ, Barbora Pulpanova, a spokeswoman, said today, citing board member Pavel Cyrani.
The Prague-based utility intends to add capacity at Temelin to replace aging generators at other atomic and coal-fed plants. Since CEZ conceived the plan, which it describes as the largest investment in recent Czech history, power prices have fallen, leading to protracted talks with the two bidders Westinghouse Electric Co. and a Russian-Czech group led by Rosatom Corp.
“An interim government shouldn’t decide on such a huge project,” said Bohumil Trampota, an analyst at J&T Banka in Prague. “This problem should be dealt with by a government with a clear political mandate.”
Prime Minister Petr Necas’s administration collapsed in June under the weight of a scandal over spying and bribery allegations. It was replaced by an interim government appointed by the president, which is awaiting parliamentary approval. The next regular elections are scheduled for May 2014.
Building new reactors at Temelin “makes no sense” in the current political and economic environment, where electricity prices hover near a record-low and demand has dropped, Trampota said. CEZ needs 70 euros a megawatt-hour to make a profit at the Temelin project, he said. Czech prices are based on the market in Germany, where year-ahead power is trading at 37.45 euros a megawatt-hour.
“This is the wisest decision for CEZ,” said Josef Nemy, an energy analyst at Komercni Banka AS in Prague. “The management clearly doesn’t want to make such a decision without the political guarantee.”