Slovakia Enters Regional Nuclear Race

On 9 December 2009 the Slovak government approved the launch of Jadrová Energetická Spoločnosť Slovenska (JESS), a joint-stock company which will be charged with building a new nuclear power plant in Jaslovské Bohunice. JESS will be a joint venture of JAVYS, the state-owned nuclear energy company (51%) and the Czech energy group ČEZ (49%).

Central Europe faces an ever growing electricity deficit in the 2010s. The new manufacturing hub of Europe as well as increased household consumption drives up demand for electricity, while plant-building has been delayed due to state ownership, or misregulated privatization. A number of countries besides Slovakia, namely Hungary, Romania and Bulgaria has decided recently to build power plants.

The costs of the new nuclear plants are estimated between are estimated €4 billion and €6 billion. Nuclear plants usually take around 10 years to build. The new nuclear capacities, if not built in a coordinated way, will cause a huge shock in the base-load supply of the regional electricity market. Another worry is that the 6-8 units planned in the region may use up most of the available investment capital in the region.

We believe that the recent news nuclear race among Central European governments must be coordinated and curved. Other parties interested in power generation and also banks and financial institutions should beware of the crowding-out effect of the multi-billion euro plans and increased government intervention in the electricity sector.