A discussion on Poland’s first nuclear power plant has yet again broken out in the Polish media. The Gazeta Prawna daily claimed that China was the main candidate for our technological partner. However, it is too early to say – writes Piotr Stępiński, editor at BiznesAlert.pl
The conversation about Beijing’s engagement in the construction of a Polish nuclear power plant has returned for real after Andrzej Piotrowski Deputy Minister of Energy had visited China, where he had signed a Polish-Chinese agreement on the cooperation in peaceful usage of nuclear energy. The event coincided with the discussion on the shape of our nuclear energy sector in Poland and the answer to a key question on whether Warsaw will decide to build a nuclear power plant.
The Gazeta Prawna daily has recently written that in turn for buying Chinese nuclear technologies, Beijing offered multi-billion investments by the Vistula river. The daily cited its own sources. It also stated that the Chinese would construct 10 GW units in both locations that are currently taken into consideration – Lubiatowo-Kopalino and Żarnowiec. Warsaw would have to pay PLN 220- 250 bn. In return Beijing would invest a similar amount in Poland as part of an offset deal.
It is no secret that China, a global economic power, wants to increase its presence on international markets and use all the opportunities that will come along. Nuclear energy just may turn out to be one of them. Beijing perceives the export of nuclear technologies in political terms. The goal is to facilitate political alliances. This will allow it to ensure long-term contracts for the construction, operation, maintenance, fuel provision, staff training and infrastructure development and to establish relationships with high-ranking government officials.
It is worth mentioning in this context that China is becoming more and more interested in the European nuclear market. In the last few years it has increased its presence especially in Central and Eastern Europe where it wants to actively engage in nuclear projects.
The construction of a nuclear power plant involves large investments and contrary to what the Energy Ministry says, Poland cannot afford to finance such a project on her own. The ministry excluded the possibility of using contracts for difference or using state budged financing. The shareholders of PGE EJ 1 (PGE, Tauron, KGHM and Enea – ed.), the company responsible for the construction of the power plant, will not be able to bankroll the investment as well.
According to the Minister of Energy Krzysztof Tchórzewski, Poland will need 1.5 GW from nuclear energy in 2030 and 4.5 GW before 2040 to decrease the emissions level of our economy and meet the EU’s energy policy decarbonization objectives. At the same time, we still do not know whether Poland will actually invest in the atom as the country’s energy strategy remains unknown. We also do not know who could deliver the technology and how the project could be financed.
According to the Gazeta Prawna daily China is the most serious candidate. It is worth pointing out that there is some skepticism surrounding this candidacy. There have been reports that Chinese companies (CGN) were accused of attempting to acquire classified data from the American nuclear sector, which could be of key significance to Beijing’s international nuclear expansion. It also needs to be stressed that during the last week’s conference, Tchórzewski said that the ministry would not disqualify or give preferential treatment to any technology provider. In his opinion, the most important thing is for all the offers to meet the EU requirements. This means China’s nuclear technology would have to be certified to enter the EU markets. This would take a very long time, which is why the ability of the Chinese to provide the required technology before 2030 may seem questionable.
It is also worth mentioning that Europe is becoming increasingly skeptical about Chinese investments. According to Politico, Germany, France and Italy are putting pressure on the European Commission to play a bigger role in protecting some of Europe’s most innovative companies from China’s politically motivated acquisitions. According to the portal, Berlin, Paris and Rome want Brussels to verify whether the purchases made by Beijing were motivated by its foreign policy or market forces.
China is trying to take over some of the most precious companies of the European technological sector. In 2016 it bought Germany’s robot producer Kuka. The growing concern in Europe is that China is not driven by profit, but the need to satisfy the country’s hunger for technology. This is one of the country’s political targets included in the “Made in China 2025” strategy.
Either way, according to Politico, Brussels is already working on new rules that will allow it to audit Chinese acquisitions on the Old Continent. In mid-September, the EC’s President Jean Claude Juncker is to announce plans on how the EU will manage foreign investments. At the same time, Politico reported that it remained unknown to what degree Brussels will be able to police those issues.
The energy sector is at an ever growing investment risk, which is displayed in the example of the Polish nuclear power station project. Is it worth to take the risk carried by Chinese technologies? This is not the only option for Poland. Beijing’s proposition may be attractive financially, but is it politically appealing? We should take great care when choosing Beijing as a partner in the construction of the power plant. It is too early to say whether China will build Poland’s nuclear power facility.