Poland’s per capita electricity consumption is one of the lowest in Europe and is expected to rise due to economic growth and climate warming. By 2030, demand is expected to reach 161.4TWh – up 36% from the level of 119.1 TWh in 2010. This requires a 33% growth in generating capacity, from 33.5 GW to 44.5 GW.
Coal-based generation contributed over 85% of Poland’s energy mix in 2012, although the proportion is beginning to fall. As a result, the Polish power sector emits 150 million tonnes of CO2 per year. Until 2013, 90% of this was covered by free emissions permits granted to Poland by the European Union. In 2013 the proportion of free emissions allowances was reduced to 70% and the rest of the requirement had to be purchased on the free market. By 2020 Poland will not have any free carbon emissions allowances.
While allowances are currently cheap, their price is expected to rise to €25 per tonne of CO2 in 2025 and €30/t in 2030. That means the current energy mix would cost Poland €5.8 billion for carbon in 2030. However, the Polish government wants to change the energy mix. It predicts that in 2030 coal generation will be reduced to 53% and nuclear generation will meet 19% of power demand (Figure 1). Under such assumptions the annual cost of CO2 emissions would be reduced to €3.6 billion.
A government report compares the costs of different types of generation per MWh in 2012 terms (Figures 2 & 3). Figure 3 is less conservative and it assumes a 90% capacity factor for new nuclear units, versus 85% assumed in Figure 2. All generation sources were compared, including pulverised coal, coal with carbon capture and storage, combined cycle gas storage and nuclear. Nuclear showed the lowest overall costs (€81.9/MWh and €64.4/ MWh at 90% and 85% capacity factor, respectively).
Legal framework and activities completed to date
The Polish Nuclear Energy Act (‘Prawo Atomowe’-literally ‘The Atomic Law’) complies with IAEA and Euratom governing documents.
It provides for an independent nuclear regulator and defines its role in the area of licensing and radiation protection. The act clearly assigns responsibility to the operator of a nuclear facility for any damage caused by its operation, including transportation of radioactive material or waste. Liability and insurance requirements are consistent with provisions of the Vienna Convention Protocol (21 May 1963), which Poland ratified. Liability for a peacetime nuclear accident is limited to 300 million SDR (Special Drawing Rights-the IMF member state monetary unit floating against major currencies; 1 SDR = US$1.53 in February 2014). That liability is equivalent to US$ 460 million or 1.4 thousand million Polish Złoty (PLN) as of February 2014.
Poland has had a nuclear power programme once before. The first nuclear power plant, in Zarnowiec, in northern Poland (but not on the Baltic Sea) was to be a 4 x 440 MW generating station with Soviet designed VVER-440 units. The second plant, in Warta-Klempicz, was planned as a four-unit station with 1000MWe VVERs. From 1982 to 1990 Zarnowiec design and construction proceeded, but the project was cancelled by the first non-communist government (see also ‘Poland returns to nuclear power’ from June 2010).
In the early 21st century a return to nuclear power was considered by every Polish government but the plans remained very long term and lacked specifics. Everything changed on 13 January 2009, when the Polish Cabinet issued Resolution #4 on implementation of the nuclear programme in Poland. On 12 May 2009, the Cabinet issued a directive to establish the Commissioner for Nuclear Power Generation. One of the roles of the Commissioner was to prepare and implement a nuclear power programme.
2009 also saw an update and expansion of the list of possible sites for nuclear generating stations compiled back in the 1980s. They were quantified on a scale of 0 to 70 points according to a set of 17 criteria. Out of the 28 sites considered, Zarnowiec scored the highest with 65.6 of 70 points. In February 2013, a shortlist of sites was published comprising Zarnowiec and the nearby village of Choczewo (with a score of 51). The winner will be selected after a full environmental assessment of both sites has been completed.
In 2010 the National Centre for Nuclear Research (NCBJ) was established. It will assist in the implementation of the Polish nuclear power programme. The centre is also involved in the Allegro project, along with the Czech Republic, Slovakia and Hungary (Visegrad Group – V4). The goal of the project is to develop a Generation IV helium-cooled Fast Neutron Reactor to burn spent fuel that will drastically reduce its remaining activity. The project is a part of the European Sustainable Nuclear Industrial Initiative.
The four main actors in Polish nuclear programme
The programme defines four "actors" responsible for its implementation. These are the Minister of Economy, investors, the president of the PAA State Atomic Agency and finally the ZUOP State Enterprise for Neutralisation of Nuclear Waste.
The Minister of Economy (through the Commissioner for Nuclear Power and Nuclear Energy Department) is responsible for the strategy and implementation of the programme and periodic updates. This includes monitoring the uranium market and development of nuclear technologies worldwide.
The President of the State Atomic Agency (PAA) is the nuclear regulator responsible for overseeing the use of nuclear materials, sources of ionising radiation, dose monitoring and radiation protection training, as well as licensing nuclear power plants to be built, commissioned, operated and finally decommissioned. To ensure independence from the Minister of Economy, a designated driver of the nuclear programme, the PAA President reports to the Minister of Environment. In recent years, the PAA State Atomic Agency has been stripped of its mandate to promote peaceful use of nuclear energy and any related subsidies (for example, the quarterly journal Progress in Nuclear Technology (PTJ) is no longer published by the PAA but by the Institute of Chemistry and Nuclear Technology). This was done to further ensure the regulator’s independence, in accordance with IAEA and Euratom guidelines. Similar changes were made in Japan in 2012 when the new Nuclear Regulation Authority was formed from the Nuclear Safety Commission and the Nuclear and Industrial Safety Agency.
The investors must have adequate financial assets, trained personnel, a design and construction plan, experience and know-how to be accepted as credible builders and eventual operators of nuclear power stations. The investors are responsible for nuclear safety, preparation and maintenance of emergency procedures, and for collecting funds for waste management, spent fuel storage and eventual decommissioning of nuclear facilities. The designated investor in the first Polish nuclear power plant is state-owned utility PGE (Polska Grupa Energetyczna). PGE employs about 40,000 people and its annual electricity production is 60 TWh – 40% of the country’s total. Its installed capacity is about 13,000 MW. These figures rank PGE among the largest companies in Central & Eastern Europe.
PGE intends to retain 70% of the shares in the nuclear project. It will sell 10% of the shares to each of three other companies: utilities Tauron Polska Energia and Enea, and mining company KGHM Polska Miedz. The deal is subject to agreement by Poland’s Competition Bureau. Because of the amount of money required for the project the investor may agree to a strategic partnership with the nuclear technology supplier once the nuclear system has been selected.
The ZUOP State Enterprise for Neutralization of Nuclear Waste has been responsible for safe management of radioactive waste for many decades, and since 2012 has reported to the Minister of Economy. After the cancellation of Zarnowiec Poland continued to operate two research reactors in Swierk-Otwock near Warsaw (EWA to 1995 and MARIA to date). The strategic government programme related to the treatment of nuclear waste and spent nuclear fuel in Poland remained active. In 1997 and 1998 it identified 44 potential rock structures in Poland that would be suitable for the construction of a deep geological repository. The country’s only waste storage site, in Rózan, will be completely filled by 2024. The ZUOP enterprise will be responsible for constructing and operating a new low and medium activity waste storage site that will cover the needs of future nuclear power stations. The site of that facility will be selected by 2016.
Eventually, storage of spent nuclear fuel will be required. On 27 August 2009 a task force was established to suggest strategies for handling nuclear waste. The task force proposed that Polish nuclear plants use an open (once-through) fuel cycle without reprocessing. To that end, the PURL (Polish Underground Research Laboratory) will be established to develop a long-term storage site for high-activity waste including spent fuel. However, the task force said that in the more distant future the fuel cycle may be modified to include secondary use and further neutralisation of spent fuel.
Polish nuclear programme: schedule
The Polish nuclear power generation programme focuses on activities related to construction of the country’s first nuclear power plant, with two reactors. Construction of a second station will begin in 2030.
Stage I (1 January 2016 to 31 December 2016)
Transformation of the PAA into a fully-fledged nuclear regulator capable of overseeing nuclear power generation in Poland. During this period the investor will carry out final site selection and nuclear system selection, and will receive feedback from regulator. The contract for technology supply will then be signed. The investor will prepare a preliminary Safety Report and apply to the PAA for a licence to construct. The investor is expected to sign all major contracts by the end of 2016. The investor will collaborate with the PSE (Polish Grid Company) to agree to a connection to Poland’s electrical grid. The investor will need to recruit and train the necessary workforce and conduct an information campaign, especially near the site.
Stage II (1 January 2017 to 31 December 2018)
Site preparation and completion of detailed design; obtaining from the PAA the necessary reviews, permits and licence to construct; and obtaining permission from the Minister of Economy as prescribed by the law. The connection to grid agreement with the PSE will be finalised. Personnel training and the information campaign will continue.
Stage III (1 January 2019 to 31 December 2024)
Completion of the first unit. Obtaining a licence to commission and then operate from the PAA. Begin construction of the first nuclear plant’s second unit. The information campaign will continue, especially in the area around the site.
Stage IV (1 January 2025 to 31 December 2030)
Completion and commissioning of the subsequent units of the first nuclear plant. Construction begins at the second nuclear power plant (completion is planned for 2035). Recuitment and development of personnel. The information campaign is extended, especially to the areas around existing and future nuclear power stations.
Reactor technology selection
The government report states that Poland will select a ‘Generation III or generation III+ reactor utilising proven LWR technology,’ but does not specify a particular design. Chapter 4.4 provides the economic justification for introducing nuclear power in Poland’s energy mix. The graphs in that chapter show the sensitivity of nuclear energy costs to various factors such as the weighted average cost of capital (WACC), overnight investment costs, fuel cost, cost of CO2 emission credits and finally the capacity factor. The last coefficient is of course extremely sensitive to construction delays (it remains at zero until the unit is synchronised to the grid). The issue of construction delays, however, was not explicitly addressed in the report.
An analysis in the report references "The Prognosis 2013-ARE, June, 2013" by Agencja Rynku Energii, an energy market agency that provides analyses for Poland’s Ministry of Economy and major Polish utilities such as PGE. The analysis assumes two nuclear units will be connected to the Polish grid, in 2026 and in 2030, respectively. The total power output of the aforementioned units is assumed to be 3000 MWe. Another, newer analysis assumes three units in operation by 2030, whose joint power rating will amount to 4500 MWe.
All of these estimates point towards selection of a Korean APR1400 or an AREVA EPR, but that does not necessarily mean that the competition is over. The investor will make the technology selection and will consider issues such as constructability and timeliness of project completion. Cost overruns related to major delays in nuclear unit construction and commissioning can have profound adverse effects on projects, including cancellation.
The financing model for a Polish nuclear plant
In predicted government spending for the decade 2014-2024, PLN 165 million (around US $55 million) has been allocated for restructuring the scientific and research infrastructure by the Ministry of Education. Outlay from the multiyear ongoing nuclear budget was assessed at about PLN 49 million ($16 million). Of this the most expensive sub-programme is a public relations and education campaign which will cost PLN 23 million. A similar amount, PLN 22 million, has been reserved for personnel development in the Ministry of Economy, the PAA, the Ministry of Education and emergency services. However, PLN 16 million allocated for the Ministry of Education, to be partially financed from the European Social Fund, will come from a joint fund that also includes funding for Poland’s shale gas technology, so the exact cash flow for nuclear personnel development is not known. PLN 8 million has been allocated for the development of the Radiation Event Centre. The overall cost of all sub-programmes for the 2014-2024 period is PLN 265 million (US $88 million).
The authors of the report clearly struggled to develop a financing model to cover the enormous expenditures involved, at a time when electricity prices are low. In March 2013 the wholesale price was PLN170/MWh (US$55/MWh). The capital cost per MW installed at the EPR reactors built at Olkiluoto 3 and Flamanville 3 has exceeded €5 million. The report says that the two plants are first-of-a-kind projects and future EPR units should be cheaper. More optimistically, the 2 x AP1000 VC Summer plant in the USA, which began construction in March 2013, was predicted in 2012 to cost €3.3 million/MW.
The report admits that investment in power generation in general and in nuclear power generation in particular is long-term and strategic in nature. Several financing models were presented, such as the Finnish ‘Mankala’ model whereby investors receive power at cost irrespective of the market price. The French ‘Exeltium’ model used at Flamanville, provides for 20-year energy supply contracts with industries that use large amounts of electricity. The long-term contracts provide for an essentially fixed price of electricity with minimal variable elements. The European Commission did not question these forms of support, although it was considered to be a de-facto exemption from the free market, but plans for a British project have had greater scrutiny.
It is too early to present a final financing model for a Polish plant. However, if there is direct involvement of the State Treasury it will become an inevitable subject of Cabinet review and negotiations with the European Commission.
About the author
Dariusz Witold Kulczynski, P. Eng, graduated from the electrical department (power) of Poland’s Warsaw University of Technology in 1977. Since 1982 he has been working in various technical sections of nuclear generating stations in Canada. He has published articles on nuclear power in Polish technical journals, and has spoken at nuclear conference and delivered lectures in Poland.
