ČEZ aims to restore full nuclear potential
30 March 2017
ČEZ expects to increase its nuclear power production by 18% this year to 28 terawatt hours as it seeks to recover lost revenue from prolonged outages. The majority state-owned utility suffered billions of crowns in lost sales last year as it carried out checks to welding joints and prepared for an operating licence renewal.
.jpg "Dukovany plant - 460 (CEZ)") |
| The Dukovany plant (Image: ČEZ) |
The Czech Republic, where nuclear accounts for 32.5% of the country's electricity generation, has four reactors at 2040 MWe Dukovany and two at 2160 MWe Temelín. The two plants, which have a combined net capacity of 4047 MWe, produced 24.064 TWh of electricity last year, down from 26.72 TWh in 2015.
ČEZ launched legal action against Škoda JS in November, accusing the nuclear power engineering firm of "misconduct" in carrying out safety checks on the welds at Dukovany, a spokesman for ČEZ said. The Dukovany and Temelín units were offline for 449.8 and 253.5 days, respectively, the spokesman added.
Both Temelín units are now working at normal capacity and produced 4306 gigawatt hours of electricity between 1 January and 24 March. Dukovany 1 is on the 69th of a 120-day planned outage, Dukovany 2 has just completed a planned outage and was reconnected to the grid today, while units 3 and 4 are in normal operation. Dukovany produced 2234 GWh of electricity between 1 January and 24 March.
Financial results
The utility's chief financial officer, Martin Novák, announced the 28 TWh production target, following the release of its 2016 financial results. Novák also said ČEZ expected to cut output at its coal-fired power plants by 1% this year to 31 TWh.
In addition to extended nuclear plant outages, ČEZ has also faced lower wholesale power prices. Adjusted profit fell by 29% to CZK19.6 billion ($776 million) last year. Earnings before interest, taxes, depreciation, and amortization (Ebitda) were CZK58.1 billion - a decrease of CZK7 billion year-on-year, of which CZK 6.1 billion was due to lower wholesale power prices.
Novák told Patria news agency on 22 March that the fall in wholesale electricity prices in 2015 and 2016 was the "main negative factor" on the company's financial results. The country's Finance Minister Andrej Babis, whose ministry controls the state's 70% in ČEZ, told Reuters however that weaker earnings were partly due to "neglect" at the company's most profitable plants. ČEZ has undergone "massive" nuclear power plant shutdowns in recent years "due to neglected welding controls", Babis said.
Novák said he hopes the company achieves an Ebitda of CZK52 billion and a net profit of between CZK12 billion and CZK17 billion for 2017, but a "change to the stagnation trend" in electricity prices would depend on several factors. First, there needs to be a "tightening in allowances" in the emissions trading system and "ideally" a simultaneous increase in coal prices, he said.
Asked about "income from litigation" in the company's dispute with Škoda JS over the welds in its nuclear power plants, Novák said lawsuits typically take more than a year in the Czech Republic and so would not affect ČEZ's financial results in 2017 or 2018.
Novák said the "relatively substantial increase" in nuclear power output this year would be possible thanks to extensive inspections of the welds of both plants.
In April last year the Czech Republic's State Office for Nuclear Safety (SUJB) granted an extension to the 10-year operating licence of Dukovany 1 for an indefinite period. The requirement to repeatedly check welds in the unit had caused delay to gaining approval from the SUJB. ČEZ is in the process of applying for licence extensions to the plant's other units.
The ČEZ spokesman said SUJB is reviewing the application to renew the operating licence of Dukovany 2.
Strategy
The State Energy Policy (SEP) and the national action plan for nuclear energy agreed by the government in 2015 foresees up to four new nuclear units. It states that Dukovany 5 has priority over Temelín to maintain production at the site after the old reactors are retired.
Nuclear is expected to become the main source of electricity production with its share rising to between 46% and 58% in 2040. The share of lignite is expected to fall to no more than 21%, while renewables could provide 25% and gas 15%. New nuclear capacity of 2500 MWe is to be added by 2035, and more thereafter.
The ČEZ spokesman said the utility is meeting the requirements of the SEP and preparing for the construction of one to two units each at Dukovany and Temelín.
"Priority is being given to the construction project at Dukovany because new units [there] would replace the existing production facilities," the spokesman said. "For Temelín we have received a positive environmental impact assessment and we're going to start the EIA process for Dukovany," he added.
The four existing Dukovany units are VVER-440 (V-213) reactors and the Temelín units are VVER-1000 (V-320) reactors.
According to the World Nuclear Association, the licences for Dukovany 2, 3 and 4 expire in 2017, 2026 and 2027 respectively, while those for Temelín 1 and 2 expire in 2020 and 2022.
The ČEZ spokesman said the utility "has not determined the service life of its nuclear power plants exactly", but expects them to operate for 50-60 years, in line with global nuclear industry experience. The operation of Dukovany 1 is assumed until at least 2035, he said.
The feasibility study for a new reactor at Dukovany is in progress, and in mid-2016 ČEZ asked the Environment Ministry for an environmental assessment for two new units. Application for a construction permit is envisaged in 2025.
In October last year, Rusatom Overseas submitted to the Czech government and ČEZ an offer to build a VVER-1200 reactor at Dukovany. The Russian company is prepared to offer a wide range of financial and commercial terms, including an EPC contract and holding minority ownership in the unit, similar to Russia's arrangement with Finnish Fennovoima for the Hanhikivi nuclear power plant project.
The Russian-Skoda consortium (Consortium MIR.1200) in June 2013 established a Czech project company Nuclear Power Alliance. Equity in that consortium is split between JSC Atomstroyexport (51%), Škoda JS (34%), and JSC OKB Gidropress (15%).
Though the government had not yet resolved the financing question, early this year ČEZ held talks with six companies and consortia which had expressed interest in building reactors at Temelín and Dukovany. They are: Westinghouse, Rusatom Overseas, EDF, Areva-Mitsubishi Heavy Industries joint venture Atmea; China General Nuclear Power Corp; and Korea Hydro and Nuclear Power.
Researched and written
by World Nuclear News