When Daniel Beneš, Czech energy utility ČEZ’s veteran CEO, described the future of Czech energy as “based on renewable sources and safe nuclear energy” in May this year, he was expressing an aspiration rather than the current reality.

At the moment the energy mix in Czechia comprises mainly nuclear and coal-based energy, with some secondary input from renewable sources. Nuclear contributed 39.4%, while coal contributed 39.3% to the electricity generation mix in Czechia in 2023, according to International Energy Agency (IEA) figures.

Coal-burning power stations are due to be phased out by 2033 as part of the country’s drive to mitigate climate change, leaving the country reliant on nuclear and renewables to meet future electricity demand, which is likely to rise because of the shift to electromobility. 

The key issue for the future is the balance between nuclear and renewables. Czechia currently lags behind the rest of the EU in only sourcing 15% of its energy production from renewables in 2023, according to  estimates by Ember and European Electricity Review 2023, compared to the EU average of 44%. 

The centre-right government only plans for renewables to supply 30% of Czech consumption by 2030, compared to an EU goal of 42.5%. Like many neighbours in Emerging Europe it prioritises nuclear power, and it has pressed inside the EU for this to be treated as favourably as renewables.

Majority state-owned CEZ’s own plans are also based much more on nuclear power than on renewables. Its choice has not only worried environmentalists but also analysts, who fear that Czechia could miss out on the full benefits of the European Union’s Green Deal.

Nuclear drive

This year when Beneš was presenting the Q1 results, he described the European Commission’s approval of state aid for a new nuclear unit at the Dukovany nuclear power plant as “a major milestone in the development of nuclear energy in the Czech Republic”.

Since then, ČEZ has recommended the Czech government pick South Korea’s Korea Hydro & Nuclear Power as the contractor for the building of not just one but two nuclear units at €16bn per unit at Dukovany, with potentially another two units at the younger NPP Temelín to be built later. CEZ has already spent CZK3.5bn (€141mn) on preparation works.

Additionally, ČEZ signed a strategic cooperation agreement with the UK’s Rolls-Royce to pay several billion Czech koruna (CZK1bn equates to €39.5mn) for a 20% stake in its small modular reactor nuclear business Rolls-Royce SMR.  

ČEZ plans to have several SMRs built by 2050, with a combined output of 3 GW. SMRs will be located on current sites of coal-fired power stations such as Prunéřov and Dětmarovice, which are being phased out. For comparison, NPPs Dukovany and Temelín have a current output of about 2 GW each.

Given the huge cost of this nuclear drive, environmental and energy analysts warn that the investments will influence the shape of the entire Czech energy transformation.

“Billions invested into new nuclear source will be missed elsewhere, mainly in the investments into renewable sources, energy storage, investments into grids and their management,” Eduard Sequens, head energy analyst from the Calla environmental NGO, told bne IntelliNews.   

The nuclear plans would also entail prioritising of investments by state grid company ČEPS to “secure [power] transit and distribution of the higher output from Dukovany and Temelín”, Sequens says. 

However, there is some debate over how much of this extra investment is really needed. Filip Křenek of public affairs think-tank Europeum points to a 2021 research paper by the Prague AMO think tank, which concludes that developing Dukovany does not necessarily have to entail “mass investments into the power grid outside of increasing its capacities”.  

Moreover, shortly after the selection of KHNP, ČEPS stated publicly that the power grid is ready for the nuclear enhancement project, which should also involve the decommissioning of the old units, Křenek points out.  

Risk of cost overruns

Sequens is also critical of the way the costs of the unclear investments are being presented. 

“The Ministry of Finance estimated expenses for four large reactors, which Fiala’s cabinet counts as CZK1.75 trillion. That is, not just the money we will send to the KHNP account, but [mainly] financing costs,” Sequens told bne Intellinews.

“If ČEZ completes its plan for 10 modular reactors, this would mean, in light of the announced cooperation with the Rolls Royce technology, more than doubling of these costs,” Sequens continued.

There are also significant risks of cost overruns. Rebeka Hengalova of Europeum says that the “economic prognosis of the completion of nuclear blocks is not clearly advantageous”, adding that “it is not possible to guarantee” calculations when it comes to material and human resources.

Hengalova pointed to the construction of the UK’s Hinkley Point C NPP, a project composed of two EPR reactors of 1630 MWe each, which was expected to be completed in 2027 and cost £26bn (€31bn). This year French Electricite de France (EDF) announced the costs have now risen to an estimated £31bn-34bn (in 2015 prices) and the completion date is likely to move beyond 2030. 

Hengalová said that it is possible that the real costs of the Czech government-backed nuclear investments will follow a similar trajectory.

Křenek points out that although the financial model for one unit was acceptable for the EC, he sees “the biggest risk” in the construction delays accompanied by growing costs, which the Czech side will have to pay. 

There are also still outstanding legal objections from the disappointed rival bidders Westinghouse and EDF.

Hengalová notes out that “the Czech Republic did not state according to which requirements it chose to select KHNP”. When announcing the selection in July, Prime Minister Petr Fiala (ODS party) said that “the Korean offer was better in practically all the evaluated criteria”.   

So far the government seems to be in the clear. The Czech antitrust authority ÚOHS stated in its October ruling – which turned down the objections from Westinghouse and EDF to the selection of KHNP – the Dukovany tender obtained a security exemption and was not required to comply with public procurement laws. ÚOHS also stated that objections against the security exemption should have been filed in March 2022.  

If there are problems with the choice of prioritising nuclear power, there are also risks with pursuing the renewable option. Building new renewable sources in Czechia can often be problematic, argues a study entitled “Paths towards clean and cheap electricity in 2050 in the Czech Republic” published by independent analysts Fakta o klimatu earlier this year.

“Electricity production costs in Czechia can be lowered by the development of wind energy. But even that is surrounded by many unknowns. For instance, it is unclear how these will be commenced here,” author of the study, Jan Krčál, told Czech Radio in an interview in June.   

Hengalová points out that “in Czechia, in general, it is problematic to commence the construction of new [energy] sources,” recalling the referenda that accompanied the June elections to the European Parliament in which several municipalities rejected construction of new renewable sources in their vicinity.   

‘Green’ is still suspicious  

What the Czech Republic still lacks is a proper debate on its future energy choice. Populist parties, led by the radical rightwing (and opinion poll leading) ANO movement of agrochemicals baron Andrej Babis, have made the Green Deal a key plank of their attacks on Brussels. They downplay the urgency of the climate crisis and the need to take counter-measures, and point to past scandals involving subsidies for solar energy farms. 

Nuclear energy is “a source of national pride” in the country, Hengalova observes, while  “better information” about sustainable sources of energy is missing. 

Europeum’s Křenek added that “the Czech Republic benefits a lot from the Green Deal already “ but that  “we should work more on state informing citizens better”, adding that nuclear energy has a better reputation than solar or wind.   

Křenek words were confirmed by major research conducted by Czech environmental think-tank Institut 2050 and published by Czech Radio in October about the public attitudes towards the climate, which shows that Czechs are mostly against the Green Deal even though they mostly do not know what it entails 

Neither are Czechs aware that the Green Deal provides over CZK1 trillion in the current programming period, with four out of five respondents stating that “politicians should explain to us better what steps they plan regarding clime protection”.

Moreover, 39% think that the Green Deal forbids people to drive cars with combustion engines after 2035, while only less than one third know it is not that way, and another third is not sure. 

When responding to the future of the Green Deal, 31% stated they cannot judge, while 26% think it should scrapped, and 24% think it should be weakened. Only 11% think it should stay the way it is, and 8% think it should be strengthened.     

“When you have an empty glass, it will get filled with whatever is poured in, and here we let the theme of the Green Deal be defined by populists,” commented Jan Krajhanzl, director of Institut 2050.