ČEZ boss sees prolonged delay before Temelín decision

Czech electricity company ČEZ is seeking the maxim time possible to decide on the so called contract of the century to build two new nuclear reactors at its Temelín site. And the two bidders for the contract are looking increasingly impatient.

Temelín nuclear power plant, photo: Filip Jandourek

Faced with low electricity prices, volatile power markets, and a possible incoming government that appears far from clear where it stands on the Temelín expansion, state-controlled energy giant ČEZ appears to be playing the long game on whether the construction tender is on and which of the US and Russian led bidders might land it.

ČEZ board chairman Daniel Beneš declared in an interview with the business weekly Ekonom published on Thursday that the state controlled energy giant should make a decision on the contract in the second quarter of 2015. That latest target is at the end of Beneš' previous prediction that a decision could be expected in 2014 or at the latest by the first half of 2015.

The ČEZ boss also confirmed slippage in construction commencement and completion of the estimated Kč 200-300 billion contract. Instead of building work being launched in 2016 or 2017 and being completed by 2025, Beneš said he now expected it to start around 2019 with power being produced between 2026 and 2028. He added that electricity from the new Temelín capacity would not be needed in any case before that time.

While a delayed decision makes perfect sense for near 70% state owned ČEZ, it will frustrate the US and Russian led bidders for the massive construction contract.

US-based but Japanese owned Westinghouse and the three-way MIR 1200 consortium, composed of Russian companies Rosatom and Gidropress in partnership with Czech engineering firm Škoda JS, announced in December that they had finalized and passed on their updated bids to ČEZ for the contract.

Westinghouse, which sees itself as a frontrunner to land the deal after being placed ahead in a preliminary evaluation by ČEZ, has hinted that it might have to increase its construction bill if there is a lengthy delay to the tender decision.

Daniel Beneš, photo: Filip Jandourek

But the US giant, which sees the ČEZ deal as a possible springboard to build other nuclear plants in Poland and Hungary and in Western Europe, has little real room to curtail the deadline. Polish and Hungarian nuclear decisions still look a long way off and ČEZ tepid tender still seems like the best regional deal to get on board. ČEZ's Beneš has been given little of substance to get to grips with regarding the potential Czech coalition government's stance on supporting the Temelín expansion. The coalition programme, whose signature is still held up by an ongoing squabble over the share out of Cabinet posts, made the bland pre-Christmas commitment that construction would be supported if it is to the advantage of the country.

Beneš insisted again in Thursday's interview that the company will not approve construction unless the Czech government puts in pace a framework supporting electricity prices from new nuclear plants that would make the new capacity pay its way. He also wants a commitment to Temelín's expansion being written into the Czech long term energy policy.

So the current situation between ČEZ and any incoming government looks like being a prolonged stand off with each side waiting for the other to blink first and the bidders being left on the sidelines.