Analyst: Project to expand Temelín should be put on hold

The project to build two new reactors at South Bohemia’s Temelín nuclear power plant represents a huge investment. But the massive project may never get off the ground, not least if the government reassesses issues surrounding the project’s financing as well as continuing uncertainty on the energy market.

Temelín nuclear power plant, photo: Filip Jandourek

I spoke to Michal Šnobr, an analyst for J&T, who explained why the expansion of Temelín – under current conditions – was far from ideal.

“Simply put, it is very high risk because it represents a huge investment for the ČEZ power utility and maybe also the Czech Republic. We are in the middle of an energy revolution in Europe and the situation isn’t easy. The EU every month, almost every week, comes out with new regulations and it is very difficult to predict electricity prices. At the moment, electricity prices are moving downwards and this is creating a problem for ČEZ and potentially the country.”

The risk, I take it, is that ČEZ expects a guarantee from the government regarding energy prices and subsidies...

“That’s the problem. It’s the only way for ČEZ to ensure its investment. The company is owned by the Czech state but we have to ask who will pick up the bill – the cost, it was expected would be covered by firms and individuals. It is the same problem as the boom in solar energy. At the moment of base load energy on the energy exchange in Germany is around 45 euros per Mwh. For Temelín to be profitable it would need to be around 65 or 75 euros and the difference between these two prices will be guaranteed by the Czech government and it is very difficult to say whether this will be paid by Czech companies or people in the future. Czech consumers could be hit too.”

Michal Šnobr, photo: Alžběta Švarcová

The government has repeatedly confirmed nuclear energy’s place, projecting over 30 years... why, given the risks, is it sticking so closely to the original playbook?

“Right now it is about political stakes and about Temelín. In expanding the plant, they are trying to create new investments for Czech industry and obviously the economy needs a positive boost and this could help. On the other hand, I think that when the government counts the real numbers they will see that two new blocks for the plant is financially a real problem. The process should be stopped or slowed down: maybe two, three or even five years. Right now the conditions are extremely negative for investment in Europe; the best decision would be to stop the Temelín tender.