## Saturday, December 14, 2019 ... //

### Nuclear energy is far from sufficient for carbon neutrality

While Czech PM Babiš spoke self-confidently here in Czechia, he didn't achieve much in Brussels.

He didn't really veto the insane EU gretin plans for carbon neutrality by 2050. Instead, along with Hungary, they agreed with these pledges – it was enough for the EU to promise that both Hungary and Czechia may maintain and expand nuclear power plants.

Meanwhile, Poland was granted an exemption from the carbon neutrality push. Good for them. It shows that they have better negotiators; but carbon neutrality at the national level would clearly be an even greater shock for Poland than for Czechia and Hungary. But now, Poland has a huge advantage relatively to everyone else. I think that we should officially donate the land beneath our coal power plants to Poland – and/or register our ČEZ power utility as a Polish company – so that these good old power plants may continue running without any harassment by the climate fearmongers.

Note that Czechia and Hungary get about 1/3 of electricity from nuclear power plants. This percentage is zero in Poland. Meanwhile, Poland has 80% from coal (a balanced brown-black mixture) plus 5% from gas. Czechia and Hungary each have only 50% from fossil fuels – Czechia uses mostly brown coal while Hungary mostly burns coal so Hungary is ahead in the "types of fossil fuels" in the gretinist sense. Poland has no nuclear energy, just nuclear dreams which aren't necessarily destined to succeed, given their lack of experience.

Czechia is "ahead" of others in the solar panels – a decade ago, Czechia was Europe's 3rd largest solar panel power in absolute numbers after Germany and Spain.

In agreement with the Czech government estimate, I estimated the cost of transition to carbon neutrality just for Czechia, Hungary, and Poland as €3 trillion or some €50,000 per capita. A million crown per capita including infants, if you wish. Clearly, some fund with €100 billion, even if it were just for our three countries, is an irrelevant tiny cherry on a pie relatively to the groundbreaking plans that the EU gretins push.

We can't keep the energy cheap yet reliable without fossil fuels.

Let me list all the numbers about the economics of energy production from the viewpoint of a ČEZ shareholder such as myself. So you know, ČEZ is the dominant Czech electricity producer – maybe even the only one. 60% of the company is owned by the Czech government. The total capitalization of the company is CZK 271 billion now – a bit over €10 billion but not quite eleven yet.

The annual profit was a bit below half a billion Euro in 2018 but it should be improved to €0.8 billion or so in 2019. Let's be generous and say that ČEZ will make a profit of one billion Euros in the average year in a foreseeable future. How good an investment is a nuclear power plant?

In 2018, Czechia produced 88 TWhe and consumed 74 TWhe, the remaining 14 is the difference "exports minus imports" – we are net exporters. About 1/3 came nuclear power plants, let's say 30 TWhe.

We have 2x 1100 MWe installed in Temelín, the newer plant in South Bohemia, and 4x 510 MWe in Dukovany, the older plant in South Moravia. In total, that's 4240 MWe of installed energy. Because of the interruptions etc., this just translates to those 30 TWhe in a year. Note that 1000 MW would give you 1000*365.24*24 = 8.75 million MWh = 8.75 TWh a year which, if multiplied by 4.24, would be 37 TWh but the reality is below 30 TWh a year due to the interruptions.

People mostly pay up to CZK 5 per kWh of energy – a person consumes about one such kWh per day. But the production cost using coal may be as low as CZK 1 per kWh. What about nuclear? 1000 MWe of nuclear reactors produces some 7 TWh of energy a year in real world conditions, as argued above. That's 7 billion kWh which would be sold for CZK 35 billion. Assuming the life expectancy of the nuclear plant above 50 years, such 1000 MWe of nuclear reactors could produce up to (2019 crowns) CZK 2 trillion in revenues per lifetime.

This sounds great so far because the production of the exact new 1000 MWe capacity in Temelín which we want to start with would only cost CZK 200-300 billion, just 10%-15% of the total revenue. (One USD is 23 crowns, one EUR is 25.5 crowns now.) However, the other expenses could be a problem. On the other hand, it's not hard to see that if ČEZ were allowed to run just the nuclear business, it could be handsomely profitable in the long run.

These utilities just got used to producing much smaller profits than desirable. It's effectively the renewable energy and similar junk that is devouring most of the legitimate profit from fossil fuels and from the nuclei. The new nuclear investment looks almost impossible to be made from the actual, real-world profits of ČEZ. Both nuclear power plants started to be built under communism (Dukovany from '78, Temelín from '87) but the capitalist investment just looks scary.

As I wrote, the real-world profit for shareholders is below CZK 20 billion a year – and even the operating one is CZK 45 billion, below €2 billion a year. Every 50-60 years, the life expectancy of the reactors etc., to sustain the status quo, and assuming everything is nuclear, you need to build 8 such 1000 MWe blocks. 8 times CZK 250 billion, the mean estimated cost of the new 1000 MWe capacity, is CZK 2 trillion. That's almost exactly the operating profit – and twice higher than the profit for shareholders for those 50-60 years. So in the long run, with similar profits, ČEZ just cannot afford to build reactors.

How is that possible that we got very different results? Because most of the profits from the cheap energy are devoured by the mandatory production of loss-making electricity etc.

On one hand, ČEZ is being forced by the government to do lots of the expensive useless things, like running expensive sources of energy. This reduces the profit from the average kWh of energy. On the other hand, it could be expected to invest into new nuclear reactors etc. I agree with the main minority shareholder, ČEZ, Mr Šnobr that it's uneconomic for ČEZ itself to fund the construction of new reactors. The calculation presented two paragraphs above shows why.

The government wants ČEZ to do lots of the loss-making things, the green ones, but it doesn't help to do such things and still wants ČEZ to operate as if it were living in a free economy. It's not really possible. The government is also the majority shareholder and it may invent lots of subsidies and/or punishments for ČEZ. We're really living in a distorted semi-communism.

If some jerks in Brussels force us to do all the green things, the cleanest solution would clearly be for the government itself to pay for all the green losses and allow the utilities to operate in market conditions otherwise. So does the government want to produce XY percent from a more expensive solar or wind energy? Be my guest but it should pay the difference "expenses for a solar kWh minus expenses for a coal/nuclear kWh" for each solar or wind kWh that is produced by the utility.

We got used to the conditions in which the utilities are just forced to sacrifice themselves – but such bullied, decimated utilities simply cannot afford to fund big investments such as new power plants from their profits. When the "good stuff for shareholders" of the capitalist companies is ruined or taken away by some green or similar policies, then you cannot expect the utilities to do the "good stuff for the society" in the long run – and investing into new nuclear reactors is one of the things that isn't possible.

It may sound counterintuitive that such basic things become economically impossible but it's the reality. The reason why people tend to think that "basic things must still be fine in these 'slightly' distorted markets" is that ČEZ is still making a positive profit. But the positive profit is a misleading indication of health. In reality, this profit is just not sufficient and the "impossible" economy of the long-term investments shows why.

Meanwhile, even if the funding of the nuclear investment were solved in some way, it's very far from allowing us carbon neutrality. We still have the cars. The replacement by electric cars needs extra almost €10,000 in subsidies per electric car – which is €5,000 per capita because there are 0.5 cars per capita. Add similar amounts, €5,000 per capita, for some extra structure that allows to produce beef or beef replacement without the cow farts – whose greenhouse effect is comparable to the cars' greenhouse effect – and about a dozen of other things.

Well, if the pressure to achieve carbon neutrality really started in the energy companies, the market price of electricity would simply have to go up radically. Clearly, if the energy price tripled, the calculation above would change. In particular, ČEZ could fund new reactors from its net profit. If we want to get there, it's clear that ČEZ should start to seek profit again – and throw away as many loss-making business as possible.

I hope that the plans for the carbon neutrality or huge drops of CO2 emissions will simply be ignored and politics will be about justifying that. The correct justification of the difference between carbon neutral plans and carbon increasing reality is that the carbon neutral talking heads are absolute mental cripples who are totally detached from reality. But this basic fact seems to be forbidden in Brussels, like many other facts. So it will have to be expressed using codewords but I sincerely hope that the status quo – in which idiots talk about insane drops of CO2 emissions while reality doesn't do anything like that – will continue. Otherwise we really need to escape from the EU or any other "community of nations" that wants us to do similar suicidal things.