|Russia's Gazprom has been an erratic|
supplier of energy to eastern Europe
The Ministry of Industry and Trade released a report earlier this month saying the country is committed to generating 50% of its electricity by nuclear energy by 2030. A key reason is to boost the energy security of electricity supplies for the Czech nation.
The plan is based on efforts to build three new nuclear power stations. Two would be built at Temelin and one at Dukovany. The national energy plan also said that renewable energy sources would likely account for less than 5% of electrical power. There have been some doubts in recent months about how far into nuclear the country was willing to go.
State owned utility CEZ says it will seek strategic partners to finance, build, and operate the new reactors. CEZ told Reuters May 9 it has identified at least 10 potential partners. While CEZ is state owned, the government's equity stake is about 70% leaving 30% open for new investors.
It isn't clear whether the government would offer some of its shares to attract minority equity stakes in the utility. CEZ could be taking a page from Areva's playbook. Last year the French state-owned nuclear giant pursued equity stakes from strategic partners by diluting the government's interest.
CEZ is currently running a tender to build the two new reactors at Temelin. The short list of bidders include Rosatom, Areva, and Westinghouse. The new units are expected to cost about $10 billion. Bids are due in July 2012. A contract with the winner is expected in early 2013. Construction is expected to set off a manufacturing boom for Czech -based suppliers of components to the plants.
CEZ says that once it has a commitment to a reactor vendor, it will seek equity financing from other European energy companies some of which are likely to also be its customers.
One of the issues that could affect the customer side of these relationships is a Czech government plan to set minimum prices for power to insure the financial viability of the reactor project.
RWE, a German utility, said it would not consider being an equity partner in the project, but not because of rate issues. The firm has cash flow issues due to the closure of eight reactors in Germany. Also, RWE recently withdrew from the UK Horizon nuclear consortium for the same reason.
Industry & Trade Minister Martin Kuba told financial wire services in early May that CEZ feels that while it could fund both Temelin reactors with its own resources, it wants to leverage them by laying off some of the costs with outside investors. CEZ CEO Daniel Benes has previously said much the same thing.
It is expected that with the Czeck Republic sharing a long western border with Germany, and that country closing its 17 nuclear reactors, that power companies there would be eager to line up to take equity stakes in the Temelin project. Germany's plan to shift to renewables is running up against some stiff challenges including an estimated cost of $20 billion euro for new transmission grids.
CEZ's plans to build a new reactor at Dukovany isn't as firm as the one to build two new units at Temelin, but the utility feels that a consulting firm's negative analysis of its prospects does not hold water. CEO Daniel Benes said the utility has a feasibility study and a commitment to complete the reactor by 2030. He said the two new reactors at Temelin would be done by 2025.
Further out CEZ may revive a plan to build another new reactor in Solvenia. At one time it was part of a $28 billion plan to build five new reactors. The utility scaled back its plans earlier this year to focus for now on the two at Temelin and a third at Dokovany. Watching the difficulties emerging in Germany over its abandonment of nuclear energy is likley a factor in the Czech republic's revisiting its larger expansion plans.
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