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Krško 2 could cost from EUR 9bn to EUR 15bn

Ljubljana, 21 May (STA) - Energy company Gen Energija has estimated the investment cost of Krško 2 with one nuclear reactor at EUR 9,314 per kilowatt, financing costs excluded but expected inflation taken into account. If Krško 2 had a capacity of 1,000 to 1,650 megawatts, the project's estimated value would be between EUR 9.3 billion and EUR 15.4 billion.

The project for what would be the second nuclear power station in Slovenia is at a stage where there are still many uncertainties, including various costs and potential technology providers, while the parliament is to decide tomorrow whether to hold a consultative referendum on it in the autumn.

Gen Energija owns the Slovenian half of the Krško Nuclear Power Plant (NEK) together with Croatia's HEP, and is currently the only investor in a potential Krško 2.

Board member Kruno Abramovič said at a briefing with journalists on Tuesday the company presented the best possible internal estimate based on currently available data and experience with NEK.

The estimate takes into account the direct costs of the project without any positive or negative wider impacts of the project.

It applies constant prices for 2024, which means that all inputs are adjusted for expected inflation in the following years and decades.

Of the EUR 9,314 per kilowatt, EUR 7,515 would go for the standardised design of the new reactor, the rest is the cost of the specific site in Krško with all the necessary accompanying investments.

The estimate is for a power station with one reactor, which entails a plant with a capacity of between 1,000 megawatts (MW) and 1,650 MW.

This puts the cost of the largest planned infrastructure investment since Slovenia's independence at just over EUR 9.3 billion to almost EUR 15.4 billion, without financing costs.

A study on connecting Krško 2 to the grid singles out one reactor with a capacity of up to 1,300 megawatts as the most optimal variant.

Abramovič said that experience with new N-plants abroad showed that the cost of investments increased considerably while the projects were being executed.

Gen Energija thus opted for a conservative approach, putting the estimate above the average of the final prices of such projects.

Gen Energija head Dejan Paravan said this approach was also due to fears that the cost could rise once the project got under way as expressed in the public and due to the bad experience with the TEŠ 6 thermal power plant.

Nevertheless, Gen Energija hopes to eventually negotiate a lower price, with Paravan saying that Krško 2 would not be the first reactor of its kind in the world.

The company also calculated the average total operating costs, including waste management, decommissioning and depreciation over 80 years of operation, from 2039 to 2119.

The range of cost prices for Krško 2, depending on the capacity of the selected reactor, is between EUR 42 and 47 per megawatt, or an average of EUR 44.5.

To get to the final own price, the cost of financing must be added, with Paravan saying this represented the key item and could even mean a failure of the project.

Here the company took into account various levels of return on equity, but said that the required RoE for such project in Slovenia was currently at 2-3%.

In this case, the final own price would be between EUR 66 and EUR 81 per MWh. EUR 81 is currently the average wholesale price of electricity on the spot market in Slovenia.

In any case, Gen Energija, a state-owned company, could not finance Krško 2 on its own, with the state's funds key to the project's implementation.

Under current rules, the state can finance a nuclear power station directly with guarantees to the tune of 49% of the investment.

Gen Energija estimates to be able to finance 20 to 30% of the investment with own funds and funds of (domestic and perhaps foreign) partners, and 70 to 80% with loans.

The company will submit all input data for the estimate to an international review, whose results should be known in September.

An assessment of the positive and negative externalities of the project will also be known before the planned referendum.

But even now, Krško 2 is expected to generate over 5,600 jobs in the 10 years of construction and the share of domestic supplies could reach 37% of the investment.

Gen Energija has already sent a draft initiative for starting Krško 2 national spatial planning to two ministries, and the final initiative is to be filed by the end of June.

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