Long term Czech energy plan still up in air

20-03-2015

Minister of Industry and Trade Jan Mládek says he is still struggling to get backing for a new long term energy plan. He warns if his first choice scenario is not backed then a worse energy mix might result by default.

Photo: Tomáš AdamecPhoto: Tomáš Adamec Czech Minister of Industry and Trade Jan Mládek is, by his own admission, making painfully slow progress towards the hoped for July adoption of a new long-term Czech energy plan.

The long-term plan, which should direct state policy and provide some assurance to business, was supposed to be passed at the end of 2014 but two fundamental problems cropped up: a lack of consensus about whether past coal mining limits should be relaxed and how to finance the desired expansion of nuclear power.

Mr. Mládek has made frequent visits to the blighted north Bohemian coalfields in the last two months and admits to favouring a limited relaxation of the coal limits which would still, however, result in the destruction of part of the town of Horní Jiřetín. He argues that if such a step is not taken the local mine will soon close and around 1,000 jobs in the unemployment blackspot will be lost.

The minister still has hopes that some sort of compromise can be found over the mining limits that might convince his, so far sceptical, Cabinet colleagues. Most say they see no need to relax the mining limits.

On the second hurdle of financing nuclear new build, Mládek admitted at a business breakfast on Friday that discussion with his main adversary, finance minister Andrej Babiš, is very difficult. Mládek has said he wants the focus of the new energy policy to be more electricity from nuclear [at least two new nuclear reactors], some coal, and a minimum of new renewables. And the front running scenario is for state-controlled electricity producer ČEZ to create a new subsidiary to finance and construct the new nuclear plants.

But Babiš, and apparently members of the ČEZ board, are resisting the idea that it leads the Czech nuclear charges, at least if no state guarantees about the future price of electricity from the new power plants is forthcoming. ČEZ bosses say they could face legal action from minority shareholders and a cut in the company’s all important credit rating if they take on such a risky venture as building new nuclear plants without some sort of guarantees. The lack of those guarantees was precisely the reason why ČEZ scrapped its Temelín tender almost a year ago.

And if ČEZ doesn’t want to take on the nuclear burden without a lot of small print guarantees, who else can do? Mládek says that long term investments – and here we’re talking about a nuclear plants that might be operating from 2035-2090, twinned with non-predictable electricity prices are the sort of double act that private investors will run a mile from.

So from Mládek’s slightly gloomy summary you might conclude that the target for approving the new long term energy concept is as good as in the rubbish bin. No quite, the minister is still, officially at least sticking to the script, and ‘firmly hopes’ that that a compromise for the Cabinet can be found. Hope dies last, as they say.

If a compromise is not found soon, the minister warns that his least liked scenario of less nuclear, less coal, more renewables and more gas fired power stations could become the new energy policy by default. As the minister points out, gas fired power plants are the fastest to build even though they will increase dependence on gas imports.

20-03-2015