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Polish private energy company ZE PAK (Zespól Elektrowni Patnów-Adam-Konin) and state-controlled Polska Grupa Energetyczna (PGE) have established a special-purpose vehicle (SPV) to manage the proposed deployment of South Korea’s APR-1400 NPPs in Poland. In October 2022, ZE PAK and PGE signed a letter of intent with Korea Hydro and Nuclear Power (KHNP) for eventual deployment of the company’s APR-1400 PWR technology at the Patnow coal-fired generation site, owned by ZE PAK.

The SPV will represent Poland in future talks with KHNP. PGE and ZE PAK will each hold 50% of the shares in the newly established company, making decisions based on consensus. The establishment of the SVP is conditional on obtaining the approval of the Office of Competition & Consumer Protection (UOKiK - Urzad Ochrony Konkurencji i Konsumentów).

The project is technically being developed as a private initiative outside the government’s central 2020 nuclear energy programme. In November 2022, the government confirmed the selection of the US-based Westinghouse as the technology provider for the first NPP to be located in Lubiatowo-Kopalino at a cost of $20bn. The location of the second government-sponsored plant is still to be determined.

However, PGE is state-owned and ZE PAK is owned by the State Treasury assuring at least informal state support. ZE PAK operates as a public limited company under the provisions of the Code of Commercial Companies and other regulations of applicable Polish law. The Company was established as result of transformation of the Zespól Elektrowni Patnów-Adamów-Konin state-owned company with its registered office in Konin into a company wholly owned by the State Treasury.

A joint statement by the companies said that the SPV will carry out a feasibility study, site survey, and environmental impact assessment in preparation for construction of at least two South Korean APR-1400 pressurised water reactor units. “I am pleased that the ZE PAK site in Patnów has been assessed, after preliminary analyses, as promising for a nuclear power plant location,” said Zygmunt Solorz, Chairman of ZE PAK’s Supervisory Board. “Together with our partners – PGE and KHNP – we conducted the analyses in just four months. I am very glad that we have agreed, as part of the Preliminary Agreement, the key terms of cooperation with PGE. This is a milestone for the construction of a nuclear power plant in Poland.”

Jacek Sasin, Deputy Prime Minister & Minister of State Assets said renewable energy sources will play a vital role in the coming decade but a stable, zero-emission source such as nuclear power will also be of key importance. “To this end, we are consistently developing the government’s Polish Nuclear Power Programme, which is complemented by the project implemented by PGE, ZE PAK and KHNP.” He added: “Despite the fact it is a business project, it has the full support of the Polish government. I am confident that its implementation will contribute to reinforcing Poland’s energy security and independence, as well as strengthening our position on the international arena.”

Wojciech Dabrowski, President of the PGE Management Board said the partners had wasted no time. “In less than four months of signing the letter of intent, along with our business partners ZE PAK and KHNP, we have completed key tasks. We have a preliminary plan to erect a NPP based on Korean APR1400 technology, which, after analysis, has been supplemented with additional proposals and assumptions.”

The joint company of PGE and ZE PAK will represent Poland at all stages of the project, including the execution of the location and environmental studies, acquiring financing, and the preparation of a detailed investment schedule together with the Korean side, but also, in the subsequent stages, obtaining permits and administrative decisions. The agreement stipulates that a Board Member designated by PGE will serve as President of the SVP Board while ZE PAK will designate the Chairman.

The central location of Patnów, at one of the key national energy hubs, enables power transmission in all directions while minimising energy transmission losses and optimising the use of the power grid. The commissioning of the first unit of the power plant is possible as early as 2035. ZE PAK President Piotr Wozny noted that Wielkopolska Wschodnia is one of the six mining regions, and the Patnów project will show that large investments in zero-emission energy can be implemented there. He emphasised that the areas where lignite has been mined for 70 years are currently being prepared for a new use with exploited open pits being flooded with water for cooling purposes for nuclear units. “We are happy, that this project is implemented so efficiently and at such a dynamic pace, he added.

Dabrowski said the financing of the investment was expected to be in the form of project finance, and additionally entities from South Korea are interested in financing both the contribution of the Korean side and providing financing to the Polish side.

Poland’s nuclear plans, announced in 2021, envisage six large pressurised water reactors with a combined installed capacity of 6-9GWe to be built by 2040. Under the plan, construction of the first three-unit NPP is expected to start in 2026, with the first 1-1.6GWe reactor being commissioned in 2033 followed by subsequent units every 2-3 years. A second three-unit plant is also envisaged. Bids were submitted by EDF, KHNP and Westinghouse.

Competition between Westinghouse and KHNP for the main contract became contentious. KHNP had reportedly offered to build six APR1400 reactors with a capacity of 8.4 GWe for $26.7bn. The Westinghouse offer was $31.3bn for six AP1000 reactors with a total capacity of 6.7 GWe, while EDF’s bid for its EPR technology was for $33-48.5bn for four to six reactors. Polish media reported that KHNP had also proposed post-construction technology transfer to Poland and media speculation was that the contract would go to KHNP.

This prompted Westinghouse to file a lawsuit against KHNP and Korea Electric Power Corp (Kepco) in a US federal court to block them from selling reactors to Poland. Westinghouse said KHNP’s reactor design included intellectual property licensed by Westinghouse and required permission from Westinghouse before being transferred to Poland or any other countries considering deploying the APR1400 reactor. However, KHNP said it had gained competence in the design, production and construction of NPPs in order to finally develop its own, independent technology.

The decision to choose Westinghouse for the main contract was generally seen by Polish media as a political decision affirming Poland’s increasingly close ties to Washington. But economics also matters, hence the parallel project with KHNP. Sasin noted at that time that the initiative of ZE PAK and PGE was “extremely interesting because it fulfils the strategic goals of Poland and Poles - cheap energy and energy independence”.

Image: Representatives from PGE and ZE PAK at the signing ceremony (courtesy of PGE)

Date: Friday, 10 March 2023
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