The Czech government has selected South Korea’s Korea Hydro & Nuclear Power (KHNP) to build two new nuclear power units, with the potential for additional units, after a comprehensive tender process aimed at bolstering the country’s nuclear energy capacity.
KHNP Wins Over EDF
KHNP was chosen over the French company EDF, despite efforts from French President Emmanuel Macron to lobby for the French bid. The tender, managed by the 70%-state-owned energy company CEZ, was expanded earlier this year to potentially include multiple units rather than just one initially planned.
Under the new plan, KHNP will construct two units at CEZ’s Dukovany nuclear plant, with discussions to follow regarding the possibility of building two more units at the Temelin power station. The cost for a single new unit, when two are constructed at the same site, is estimated at 200 billion crowns ($8.65 billion). The government projects that the electricity generated will cost less than 90 euros per megawatt hour (MWh).
Details of the contract will be finalized by the first quarter of next year, after which the agreement will be signed. “The Korean offer was better practically in all assessed criteria,” said Czech Prime Minister Petr Fiala at a news conference. “We will build two blocks at Dukovany, and in this direction there will be negotiations. And we will discuss options for another two blocks at Temelin about which we will be able to decide in the future.”
KHNP has been involved in several recent reactor projects, including the first nuclear power plant in the Arab world, located in the United Arab Emirates. This new contract will strengthen KHNP’s presence in Europe.
In 2022, KHNP also partnered with a Polish consortium to develop new nuclear reactors, although that project remains uncertain. KHNP CEO Whang Joo-ho expressed confidence in the Czech project, stating the company would enter final negotiations to “ensure that the APR1000 reactor is actually built in the Czech Republic,” referring to their reactor model.
Challenges for EDF
EDF, the sole builder of nuclear reactors in Europe, has not completed a new unit since 2019 due to project delays. This decision marks another setback for the French nuclear sector, following Poland’s choice of Westinghouse over EDF for a Baltic Sea plant in 2022.
The Czech government had the final say in the tender due to national security concerns and the high costs, which were too substantial for CEZ to manage alone. With a market capitalization of $20.1 billion, CEZ needed governmental support to shoulder the financial burden.
Future of Nuclear Power in Czech Republic
The Czech Republic plans to rely more heavily on nuclear power as it phases out coal over the next decade. Nuclear power is expected to constitute half of the country’s energy mix in the future, up from the current one-third. CEZ aims to begin construction of the first new unit at Dukovany later this decade, with completion expected by 2036.
To reduce costs, the government and CEZ expanded the tender’s scope. This will be the country’s largest energy investment to date. CEZ has agreed on a financing model with the government for the first new unit at Dukovany, which includes low-interest loans and a pricing scheme for electricity—called a contract for difference—to guarantee returns for CEZ.
The European Commission has approved state aid for the first unit and will need to sign off on aid plans for additional units. The Czech Finance Ministry aims to finalize the financing model for the additional units by the end of the year.
This strategic decision marks a significant step in the Czech Republic’s energy policy, aligning with its goals of energy security and sustainable development.
Source: Reuters
