CEZ cancels Temelin expansion tender

Thursday, 10 April 2014

Czech utility CEZ has informed the participants in the tender to construct two new reactors at the Temelin nuclear power plant that it has cancelled the procurement process.

The tender process for the new Temelin units was launched in August 2009. Bids to build the new Temelin units were submitted by three candidates - Areva; Westinghouse; and a consortium between Škoda JS, AtomStroyExport and OKB Gidropress. However, CEZ informed Areva in October 2012 that its bid for its EPR design had been disqualified. CEZ had expected to select the reactor supplier last September and to sign the construction contract by the end of 2013. The units had been scheduled to begin operating in 2023 and 2024.

"While originally the project was fully economically feasible given the market price of electricity and other factors, today all investments into power plants, whose revenues depend on sales of electricity in the free market, are threatened."

Daniel Benes, CEO of CEZ

However, CEZ - which is 70% state owned - announced today that it has now cancelled the procurement process in accordance with the Public Procurement Act. It said that it has informed all the participants in the tender - including Areva - of its decision.

The move followed a meeting of the cabinet yesterday, at which the Czech government declared that, while it supports nuclear energy development in the country, it would not provide any guarantees to the project. CEZ had been seeking an agreement with the government to guarantee future electricity prices from the new Temelin units.

Czech prime minister Bohuslav Sobotka was quoted by the Czech News Agency (CTK) as saying "We have clearly declared that we currently refuse any type of state guarantee. Nobody should be surprised at this considering the experience we have had with support to renewable sources, above all to solar power plants." He added, "Moreover, the development on energy markets is unpredictable to a maximum extent, and the government can hardly pledge to guarantee electricity prices."

CEZ CEO Daniel Benes commented, "Since 2009, when the public tender was launched, until today, the electricity sector in Europe has evolved turbulently. While originally the project was fully economically feasible given the market price of electricity and other factors, today all investments into power plants, whose revenues depend on sales of electricity in the free market, are threatened."

He noted, "It does not mean that we have stopped [plans for] nuclear power plant construction in the Czech Republic. The risk that within 20 years we will not be able to cover consumption of our country is still acute. However, our plans will have to be adjusted to changes currently being prepared in Brussels. Apparently, in the future it will be necessary to cooperate closely with the state in order to secure further development of nuclear energy."

Czech president Milos Zeman has reportedly called for another tender to be launched for the supply of the two new Temelin units. He has said that he would like to see Areva and South Korea participate in that tender process.

At yesterday's cabinet meeting, the decision was taken that the minister of finance and the minister of trade and industry will jointly prepare a comprehensive plan on the development of nuclear energy in the Czech Republic by the end of 2014.

The Temelin site is already home to two VVER-1000 reactors, in operation since 2000 and 2003 respectively. Original plans for two further VVER units to be built at Temelin were put on hold by the Czech government in 1990.

Researched and written
by World Nuclear News