Feb. 7 (Bloomberg) -- The new Czech government’s threat to abandon a tender for a $15 billion nuclear project risks leaving utility CEZ AS and the bidders to build the reactors with large losses.
A Russian-Czech group led by Rosatom Corp. has invested “hundreds of millions” of koruna in the tender for two new reactors at the Temelin power station announced in 2009, Ales Pospisil, a spokesman for Rosatom’s overseas unit, said by telephone. Rival bidder Westinghouse Electric LLC also said it’s incurred “very significant costs.”
Prime Minister Bohuslav Sobotka, whose government was appointed on Jan. 29, told lawmakers yesterday that he isn’t open to providing price guarantees on power generated by new Temelin reactors that would “dramatically burden” households and businesses in decades to come. CEZ Chief Executive Officer Daniel Benes warned last month that without some form of state guarantee his company may ditch the $15 billion project.
“So much money, time, energy and emotions have been invested in Temelin,” Rosatom’s Pospisil said. “The investors will want to hear what’s coming next so they can act accordingly.”
CEZ shares were up 1.1 percent to 518.70 koruna at 9:24 a.m. in Prague, extending yesterday’s gain of 2.6 percent.
CEZ, which operates the country’s two atomic plants, has already twice delayed choosing the supplier of the new Temelin reactors after the recession cut demand for power, dragging down electricity prices and squeezing profit margins. The Prague-based utility is spending more than 10 million koruna ($494,900) a month to keep its teams working on the venture, former Temelin director Frantisek Hezoucky told aktualne.cz in December.
CEZ decided to build the new Temelin reactors around the time when electricity prices peaked at 90 euros ($122) a megawatt-hour. Falling prices have since made large nuclear investments less attractive, while tumbling carbon-credit costs have reduced the incentive to build low-emission projects.
The utility is waiting for the new government to complete an energy strategy, which will determine the country’s commitment to nuclear power and its place in the energy mix. CEZ can’t make any decision on Temelin until that strategy is in place, Benes has said.
“The costs for participation in the tender are very significant and further delays would of course mean another increase for all the parties involved,” Pavel Janik, country managing director for Westinghouse, said in an e-mailed statement. “Westinghouse doesn’t see any need for further delays in the tender process.”
Temelin’s existing reactors generate more than 2,100 megawatts together, and the proposed units would have a similar combined capacity.
With only two nuclear sites and a fleet of coal-fired units fed by increasingly scarce lignite from local mines, CEZ says it will need to replace almost 3,500 megawatts of capacity by 2030.
While that capacity was supposed to come from new reactors, opponents of Temelin’s expansion argue that the country doesn’t need such a massive new source of generation because it already exports 20 percent of its electricity output and efforts to boost efficiency may lower power consumption in the future.
The Czech Republic is also hesitating to choose a supplier because neither bidder has completed a single reactor of the type they’re offering to CEZ anywhere in the world, Foreign Minister Lubomir Zaoralek said yesterday in Prague.
To contact the reporter on this story: Ladka Bauerova in Prague at email@example.com