Published on Renew Economy 7/21 John Quiggin

Czech nuclear power plant bid $8.6 billion, LCOE $150/MWh, to be completed in 2038
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Evaluation of Australian nuclear power plants following Czech nuclear decision

Published on Renew Economy 7/21
John Quiggin
a professor at the University of Queensland

The biggest question about nuclear power in Australia is how much it will cost. A handful of recently completed plants in the U.S. and Europe operated over time and budget, but perhaps avoided such failures. On the other hand, the relatively successful UAE Baraka project was carried out under conditions incomparable to democratic high-wage countries such as Australia. In addition, the cost of the project, which was concluded with a long-term contract for both construction and maintenance, remains unclear. Most other projects are being built by Chinese or Russian companies, with no choice in Australia.

Under these circumstances, CSIRO's Genesis project relied mostly on the case of South Korea, one of the few developed countries that maintained its nuclear power plant construction program. By adjusting the cost of restarting from scratch, CSIRO estimated the estimated construction cost of the 1000MW nuclear power plant at least $8.6 billion, and the equalized power generation cost (LCOE) for large-scale nuclear power plants at $163/MWh to $264/MWh. Given the limited evidence base, however, critics like Dick Smith could argue that CSIRO overestimated the cost of capital.

Thanks to the Czech Republic's recent announcement, it now has the basis for a more accurate estimate. Since the last commissioning of a nuclear plant in 2003, the Czech government has been seeking commercial contracts to build more, with little success until recently.

Finally, after a process that began in 2020, the Czech government requested bids from three companies to build at least two and up to four 1,000MW reactors. Two contenders remained after Westinghouse was ruled out for failing to meet the bidding conditions: EDF and KNHP. On July 17, news broke that KNHP had been selected as the winning bidder, coincidentally, at $8.6 billion per GW.

Unfortunately for nuclear advocates, this figure is in U.S. dollar terms. In Australian dollars, it is $12.8 billion, about 50% more than CSIRO Genesis estimates. At this price, the LCOE would exceed $225/MWh even for the most favorable homes.  

And unlike in Australia, the Czech Republic is offering redevelopment sites at no additional cost. The new plant will replace Dukovani's existing Soviet-era reactor. In Australia, on the other hand, Dutton's proposal should include the cost of building the plant, forcing the existing site from a mostly unwanted supplier.

The bad news doesn't end there. The (inevitably optimistic) electricity generation target point is 2038, when Australia's last coal plant shuts down. But even if Dutton's government assumes it can start the bidding process shortly after taking office, the Czech Republic is at least five years ahead of Australia. In reality, it needs to establish and staff state-owned nuclear power companies and nuclear regulators with proper legislative systems.
And there is one more thing. Westinghouse, which has been removed from the Czech bid, is in a lengthy lawsuit with KNHP alleging intellectual property infringement. A final ruling is not expected until 2025, though so far unsuccessful. If Westinghouse wins, the Czech project will almost certainly be delayed.

In summary, building two to four 1000MW-class nuclear power plants in Australia based on Czech announcements would cost $50 billion to $100 billion, and would not be completed until the 2040s.

If nuclear power is so expensive, why did the Czech Republic choose this technology? The reason can be found partly in the historical background. The former Czechoslovakia was an early adopter of nuclear power, and despite the usual delays and cost overruns, the passion for this technology seems to have persisted.

More importantly, however, is the influence of one figure, Vaclav Klaus, who dominated Czech politics from the dissolution of the Soviet Union until the 2010s. Klaus has little in common with Vaclav Havel, the architect of Czech freedom, except that he has the same name. Klaus was an extreme climate science denier, and his views are reflected in the right-wing party he founded, the Civil Democratic Party (ODS). Klaus himself infamously retired in 2013, but the ODS remains the dominant force.

The current Czech prime minister, Petr Fiala (also a member of the ODS), has, like other "sceptics," gone from outright denial to what Chris Bowen called "excessive hard-line." And with Europe's high carbon prices, continuing to use coal is far less sustainable than in Australia. On the political front, nuclear power is the ideal solution to the problem of not embracing renewables and replacing coal. However, the economic side is a shame.

With luck, Australia can learn from the Czech lesson. Even under the favorable conditions of redevelopment sites and existing nuclear industries, new nuclear power plants are hopelessly uneconomical.