Nuclear decommissioning costs become growing issue for Czech Republic

Temelín, photo: Filip Jandourek

While the main spotlight in the Czech Republic is on financing new nuclear reactors, the question of covering the costs of dismantling the old ones once their operation lifetime is over is also looming large. And according to some experts and international comparisons, the Czech Republic could be looking a bit underfunded when the final bills for decommissioning reactors and dealing with highly radioactive waste start to be presented.

Temelín,  photo: Filip Jandourek
Hundreds of nuclear experts from around Europe and beyond converged on Prague last week for the 10th European Nuclear Energy Forum, an event created by the pro-nuclear Czech and Slovak governments as a sounding board for the sector and opportunity for experts to meet. One of the subjects up for discussion was nuclear decommissioning, basically the dismantling of old nuclear reactors once they have ceased operations, as well as the storage of highly radioactive nuclear waste.

Like most things that can be delayed, both subjects have to some extent been in the background until recently. But they are now beginning to loom very large Europe wide and for the Czech Republic in particular. It has six nuclear reactors in total at the two sites of Dukovany and Temelín and highly radioactive waste stored in temporary facilities at the power plants with the search for a long term deep storage site still proceeding. The first reactors will probably shutdown in 2035.

One of the hottest questions emerging is whether the funds that are being earmarked for both decommissioning and waste disposal are really adequate. In the Czech Republic the rules have been set so that state-controlled electricity producer and nuclear power plant operator ČEZ is directly responsible for pay rolling nuclear plant decommissioning and it also pays into an account which should cover the costs of waste disposal. Nuclear watchdog, the State Authority for Nuclear Safety, sets the sums that it believes are required for waste disposal and oversees the amounts ČEZ pays into the decommissioning account.

What has been set by the State Authority for Nuclear Safety on the basis of ČEZ proposals is a sum which, in our opinion, is about half the amount which is really required.

Edvard Sequens is the energy specialist for the Czech environmental group Calla and he believes that the funds being set aside for decommissioning and radioactive waste disposal in the Czech Republic fall well short of what is really required. This is what he had to say about the adequacy of the decommissioning funding: “What has been set by the State Authority for Nuclear Safety on the basis of ČEZ proposals is a sum which, in our opinion, is about half the amount which is really required. That stems from the experience of foreign companies which are already dealing with the liquidation and the estimates of the International Atomic Energy Authority which counts on 500 million US dollars for every nuclear reactor. The Czech Republic has about half that.

“The second thing is that the required amounts have not been allocated for the Dukovany nuclear power plant because the money began to be set aside when it was already up and running for a long time, around half of its estimated operational lifetime. So there will not be enough money when it stops operating, let’s say after 40 years of operation with an extension of 10 years. So the fund will be around 22.5 billion crowns short.”

ČEZ carried out a study for Dukovany in 2013 and for Temelín in 2014 that estimated the final decommissioning costs for the first at 22.4 billion crowns and for the latter at 18.4 billion crowns. The amount paid in 2014 alongside for long term storage of highly radioactive waste came to just over 1.5 billion crowns.

Finnish model

Dukovany,  photo: Michal Malý
Herkko Plit is head of the nuclear energy division at Finland’s Ministry of Employment and Economy and was one of the speaker’s about decommissioning and radioactive waste at last week’s Prague nuclear forum. He gave the following Finnish perspective on decommissioning and waste costs : “We have a special fund that is collected from nuclear utilities there and that should cover all the costs of decommissioning and final disposal and the estimate is that we have five existing nuclear units there and the total costs would be 6 billion euros, of which the decommissioning would be about 3 billion euros.”

Three billion euros comes at current prices to around 81 billion crowns for decommissioning alone, that is indeed around twice the sum earmarked in the ČEZ estimates for Dukovany and Temelín combined. And Mr. Plit adds that both Finland and Sweden are now taking decommissioning costs very seriously with new nuclear reactors being planned now so that the end of life decommissioning costs are as small as possible. ČEZ spokesman Ladislav Kříž made a general comment on the apparent difference in Czech and Finnish decommissioning costs that local labour costs will certainly be a lot lower than in Finland.

At the moment, nuclear reactors are being decommissioned in neigbouring Slovakia, Lithuania, Bulgaria, France and Britain to name but a few European countries. Slovakia has frequently had to go back with a begging bowl to European institutions to cover its escalating costs. Overall though, decommissioning is still a fairly new business sector - although one which is estimated to grow to around 200 billion euros a year - and the existing and estimated costs appear to vary greatly.

Commission scrutiny

Not surprisingly, the European Commission is taking an increasing interest in the question. It has already set out rules which spell out clearly that it is the nuclear power plant operators and not governments which must pick up the bill for decommissioning and waste disposal. It does not want a repeat of the situation in Italy at the end of the 1980s when all nuclear plants were closed but no funds had been set aside by the companies to cover the costs.

So the important thing is not to have a yes or no but to have a mechanism which we can be adapted, let’s say from the financial point of view, as we move along.

Gerassimos Thomas is a deputy director general at the European Commission’s Energy Directorate who spoke at the Prague nuclear forum. He said that the Commission began around two years ago looking into the adequacy of national decommissioning funds but that a lot of further work will be required to get a real grip on whether the sums are sufficient: “Well in 2013 it was the first report that was made and that highlighted that the necessary arrangements were put in place. So we are now going to analyse better the costs side. The cost side is not known yet, this is the purpose of this conference to have a better debate and research about the costs in order to have a look at their adequacy. The costs are not defined. We heard for example from Sweden that they had to increase them. They had made certain estimations and then they discovered that they might need a bit more, so they increased the funding.

“So the important thing is not to have a yes or no but to have a mechanism which we can be adapted, let’s say from the financial point of view, as we move along. What has been achieved is that now we have legislation which makes it clear that decommissioning costs have to be covered by the operations and not by the [national ] budget.

What we are looking at in fact is very movable target as regards costs at the moment as deputy director Thomas continues: “The costs can vary very, very, much. Of course, once you remove the radioactive parts and remove the radioactive parts in the core then of course you can calculate what it costs to take down a normal building. But I think we are still in the phase, the whole industry everywhere that we are analysing and looking at the costs of dismantling under certain procedures that make sure there is no radioactivity released, that the workers are safe, and that this is still a process by which we are learning. We soon hope to be able to export best practices and we announced in this conference that we planned to organise an exchange of best practices soon.”

With the costs estimates all over the metaphorical dartboard, it’s pretty clear that some countries are probably in for some nasty surprises and, perhaps a few, for some pleasant ones with the rush of European nuclear plant closures taking place in the next decade or two. Companies in some countries too could be set to corner a slice of a very attractive market indeed.