Czech Republic selects KHNP for nuclear plant project

“We are deciding on a project for decades to come," said Czech prime minister Petr Fiala at a press conference this week. "The Czech Republic must be as energy self-sufficient as possible, and Czech households and the Czech economy must have sufficient energy supplies at an affordable price. This project will ensure this and with it a high quality of life, prosperity, and competitiveness of our economy.”

Fiala added, “Our goal was to come up with a solution that would be economically rational and provide enough energy at an affordable price. The offer of the Korean company KHNP meets these parameters. At the same time, it will bring a significant impetus to the development of the Czech economy thanks to the involvement of Czech industry to the extent of about 60 percent.”

The project: Elektrárna Dukovany II (EDU II), a subsidiary of Czech utility ČEZ, originally received three bids for new reactors at the Dukovany and Temelín plants. Dukovany currently houses four Russian VVER-440/V213 pressurized water reactors, while Temelín is home to two VVER-1000/V320s.

In February, the Czech government revised its request to achieve cost savings, and Westinghouse/Bechtel decided not to pursue the project.

The two remaining bids, from KNHP and Électricité de France, bids were compared against the same criterion: the price per megawatt-hour produced at the new unit, considering all known risks associated with both bidders’ entries. Around 200 experts evaluated the bids, following the recommendations of the International Atomic Energy Agency.

The chosen KHNP bid for construction of two units in one location at the same time came in at a price of around CZK 200 billion (roughly $8.6 billion) per unit. The final amount will be decided after contract negotiations.

KHNP’s APR1000 reactor, which has an output of 1055 MWe, received European certification in 2023. It has been adapted to meet European conditions and requirements based on the latest standards of the IAEA and the Western European Nuclear Regulators Association (WENRA).

Quotable: “We are proud that KHNP has been able to become an important player in supporting to meet energy needs and reduce carbon emissions, extending beyond Korea,” said Jooho Whang, KHNP chief executive officer. “A nuclear project means long-term cooperation for the next 100 years or so, from construction to operation. The construction of the APR1000 reactors would thus guarantee the long-term development of partnership and friendship for both countries. Thus, a strengthened partnership between the governments of both countries could enable extensive cooperation across a wide range of areas. We see this as a major commitment and will do everything possible in the final negotiations to ensure that the APR1000 reactor is actually built in the Czech Republic.”

A better deal: “This is a truly historic project," aid Jozef Síkela, minister of Industry and Trade. "Therefore, we have very carefully examined the evaluation of the offers from the ČEZ Group and considered all options for further action. It is clear that the preferred bidder offered a better price and more reliable guarantees of cost control, as well as the timetable of the entire project."

The Czech Republic currently relies on nuclear for about one-third of its electricity, but Síkela said the country wants it to grow to 50 percent.

“The option of building two units on one site will also ensure that much of the work will not have to be done twice and will allow economies of scale to be exploited, leading to significant cost reductions” of about 20 percent per unit, he added.

Government officials are also counting on a stimulus to the Czech economy from the project, with estimates that every koruna invested in construction will result in up to three koruna in downstream investments. KHNP has promised to maximize involvement of Czech companies in the project. Since 2016, KHNP has already identified over 200 potential Czech suppliers and signed more than 76 memoranda of understanding with Czech companies, according to the Czech government.

"Cooperation with Czech companies with cutting-edge technological and scientific capabilities is not only one of our top priorities, but also an absolute necessity for the success of the completion of new nuclear units in the Czech Republic," said KHNP executive vice president Insik Park.

Finance minister Zbyněk Stanjura added,“[This] means the creation of skilled jobs and consequently substantial revenues for the state public finances.”

Paying for the project: The finance ministry is working on a financing model for the units, which will involve a state loan in the form of repayable financial assistance with a maturity of 30 years that will not bear interest before the new units start operating. Further, it will protect investors against external risks and a commitment to purchase electricity at a set price for 40 years.

The European Commission approved the public-support model for the new unit at Dukovany at the end of April. Public support makes the project financially viable and attractive for investors and ensures return on the state loan. Financing in the form of repayable financial assistance is more advantageous for the project in terms of interest, which is expected to reduce the cost of the entire project and thus the price of electricity for consumers.

The repayable financial assistance assumes zero percent interest during the construction of the new nuclear power source, and 1 percent interest above the interest at which the state borrowed the finance, but at least 2 percent after the start of operation.

The timeline: “We have a clearly defined schedule that provides for a fixed date for the start and completion of construction, and it is important for us that the selected contractor commits to it under threat of sanctions. The preferred [bid] was more responsive in this regard,” said Daniel Beneš, ČEZ CEO.

The contract is expected to be signed in the first quarter of next year. Then the contractor must secure a building permit by 2029 and start trial operation by the end of 2036, with commercial operation starting in 2038. Adherence to the construction schedule is subject to contractual penalties.

Community outreach: KHNP has pursued community outreach during this process, through sponsoring a local sports team, participating in volunteer activities, and engaging in cultural exchanges. This has garnered trust from a wide range of stakeholders and contributed to the company’s success in the bidding process, according to the Czech government.