In a landmark decision aimed at bolstering its energy security and reducing reliance on fossil fuels, the Czech Republic has chosen South Korea's Korea Hydro & Nuclear Power (KHNP) to construct two new nuclear power units at its existing Dukovany nuclear plant, with the potential for two additional units at the Temelin power station.
The announcement, made on Wednesday by the Czech government, marks a significant victory for KHNP over rival French bidder EDF, despite lobbying efforts from French President Emmanuel Macron. The tender process, overseen by the 70%-state-owned energy company CEZ, was expanded earlier this year to include the option for multiple units, reflecting the country's ambitious plans for nuclear energy expansion.
The decision to award the contract to KHNP comes after a thorough evaluation of the technical and financial aspects of both bids. Czech Prime Minister Petr Fiala emphasised that the Korean offer was superior in virtually all assessed criteria, including price, technology, and experience. The government estimates the cost of one new unit to be around 200 billion crowns ($8.65 billion) at current prices, with the potential for cost reductions if multiple units are built simultaneously.
The Czech government's decision to prioritise nuclear power expansion is driven by several factors. Firstly, the country aims to phase out coal-fired power plants in the coming decade, necessitating alternative sources of reliable base load power. Nuclear energy is seen as a viable option due to its low carbon emissions and ability to provide consistent electricity generation.
Secondly, the government envisions nuclear power playing a more significant role in the country's energy mix, with a target of increasing its share from the current one-third to approximately half in the future. This ambition reflects a growing recognition of nuclear power's potential to contribute to energy security and climate goals.
The Czech Republic's choice of KHNP is not surprising, given the company's proven track record in constructing and operating nuclear power plants. KHNP has recently completed several new reactors, including the Arab world's first nuclear power plant in the United Arab Emirates. This deal represents another significant foothold for KHNP in the European market, following its agreement to develop new reactors in Poland.
For EDF, Europe's sole builder of nuclear reactors, the Czech decision is a setback after it lost out to Westinghouse in a separate Polish nuclear power plant tender last year. The company has faced delays in recent years, with no new units completed since 2019.
The Czech government's commitment to nuclear power expansion is unwavering, with plans to commence construction of the first new unit at Dukovany later this decade, with an expected completion date of 2036. The government and CEZ have agreed on a financing model for the initial unit, including low-interest loans and a contract for difference mechanism to ensure CEZ a return on its investment. The European Commission has already approved state aid for the first unit and will need to sign off on aid plans for further units.
