The Czech Republic aims to increase the share of nuclear power in its energy mix even as neighboring Germany plans to shut down all of its atomic plants and prices of European electricity hover close to all-time lows.
The country’s new energy strategy categorizes nuclear power as “crucial” for preserving energy security, Deputy Industry Minister Pavel Solc said in an Oct. 9 interview conducted via e-mail. The strategy draft, subject to environmental assessment, is slated for the cabinet’s approval early next year.
With two nuclear-power stations and a fleet of coal-fired plants fed by lignite from local mines, the Czech Republic exports as much as 20 percent of its electricity production. Czechs will need to replace almost 3,500 megawatts of capacity by 2030, which will come mostly in the form of new atomic power, the deputy minister said.
“We’re unable to make up for it with renewable sources or increased energy efficiency,” Solc said. “By 2030, our export potential will completely disappear.”
CEZ AS, the largest Czech utility that operates the country’s two atomic stations, has twice delayed choosing the supplier of two new units at the Temelin power plant. It’s asking the government to provide guarantees on the purchase price of power to make the $10 billion project economically feasible. The state holds a 70 percent stake in the company.
CEZ shares fell 2.3 percent to 472 koruna today in Prague. The stock has lost 31 percent of its value this year.
U.S.-based Westinghouse Electric Co. and a Russian-Czech group led by Rosatom Corp. are vying for the Temelin contract. CEZ delayed the decision until the end of 2014 at the earliest.
Germany chose to exit nuclear energy in 2011 following the tsunami-induced disaster in Fukushima, Japan. Chancellor Angela Merkel ordered the shutdown of all of the country’s 17 reactors by 2022. Eight have already closed.
Power for next-year delivery in Germany, where CEZ sells part of its output, has dropped 15 percent this year and touched a record-low 36.20 euros ($49) per megawatt-hour in August, according to data compiled by Bloomberg.
CEZ would need power prices to recover to about 80 euros a megawatt hour to make Temelin a break-even project, according to Patrick Hummel, a Zurich-based utilities analyst at UBS AG who recommends selling the utility’s shares.
“It shows you how value-destroying the project would be if there isn’t sufficient financial support provided,” Hummel said in an Oct. 8 telephone interview. New reactors in Europe are unprofitable “by a mile, and we don’t see that changing any time soon.”
CEZ management can’t make the decision on Temelin until the state long-term energy strategy is in place, spokeswoman Barbora Pulpanova said Oct. 10 by e-mail. The company needs to ensure the investment is profitable, which at this point isn’t the case without state aid, she said.
The Czech government is taking part in the European Union’s discussion on how to fix the power market, which is keeping electricity prices “artificially low,” Solc said. Even so, the energy strategy draft relies on nuclear energy rather than smaller power sources to avoid excessive dependence on fossil fuel imports.
“The problem with nuclear power is it lacks flexibility,” UBS’s Hummel said. “It’s the dinosaur in the energy system. It just doesn’t fit in the future energy mix.”