Author Luboš Kreč
Published on CzechCrunch 10. 10. 2023
After the invasion of Ukraine by Russian troops, the energy sector has once again come to the forefront of the interest of politicians, businessmen and the public. After years when it was neglected and when not much was happening in it, at least in the Czech Republic, it suddenly became a very talked about topic. Not to mention: gas and electricity prices have shot up, the government has started to tackle the completion of nuclear power plants, it has started to buy up gas infrastructure, people and companies are buying heat pumps and photovoltaics in large numbers…
Vladimír Hlavinka is a matador in the field, he joined Dukovany just after the revolution and worked his way up to the Board of Directors at CEZ, where he was responsible for both domestic nuclear power plants. And he still likes to talk about them today, even though he left the parastatal ten years ago. But there is one topic he likes even more – sustainability, green deal, reducing emissions. Incidentally, as part of its ORGREZ Group, it recently launched a new company, ORGREZ ECO, which focuses on ESG issues and advises other companies on how best to tackle decarbonisation.
“Human activity will always put a strain on the planet and we should try to put as little strain on it as possible. The main thing is to pass the Earth on to the next generation in the best possible condition,” says in an interview with CzechCrunch the 57-year-old businessman, who knows the Russian energy industry in detail, having managed, among other things, the Rosatom-owned company Uranium One. In the interview, he talked about the future of small modular reactors, whether there is something like a renaissance of nuclear energy, what Czech politicians have fallen behind in, what modern energy looks like and why he became an entrepreneur and then a manager.
The government should soon choose who will complete the expansion of the Dukovany power plant and perhaps even Temelín. As someone who was in charge of both nuclear power plants, how do you perceive the debate around the completion?
I was in CEZ when the completion of Temelin 3 and 4 was being dealt with, when Temelin 1 and 2 were being stabilized and when land for Dukovany 5 and 6 was being bought. So I have no doubt that it is necessary to complete both plants, but unfortunately we have wasted a lot of time. This is under the governments of ANO and ČSSD – in 2013 we could choose who would deliver the power plant. The people who had experience and were there when Temelín was built and started up were in their prime, between 40 and 50 years old, they had experience with the start-up and the construction. But now we’re ten years down the road and the same people are about to retire. So, given that construction will not actually start for many years, we are facing a major staffing problem caused by past governments. And that’s a shame.
It is sometimes said that we have wasted our nuclear know-how and that we are no longer at the cutting edge of nuclear energy.
We have to separate two things. We continue to have excellent operational experience, we can design cores, we can modernise nuclear power plants and design improvements. What we have lost, however, is the experience of construction, which is a different discipline. Just learning from the mistakes made in the construction of Temelín and Dukovany is something of enormous value. And in the ten years that nothing has happened, we have just lost a good part of it. Our starting positions then and now are simply different.
It’s just that nothing has happened in the energy sector in general for a long time, right?
Nothing happened here. In the world, yes. Although large strategic units, which usually have to be supported by the states, have not been built, small distributed energy industries, for example, have seen great development. There is a lot of discussion about how cogeneration, solar, batteries will be built, but that is only one point of view. Historically, the power industry grew from small hydroelectric power plants at sawmills, through thermal power plants with a capacity of twice 50 MW to the really large units around which the distribution network and then the transmission network grew. The business model was grafted onto a system where power plants generate power, send it to the backbone grid, and then electricity flows from the high voltage to end customers.
But this is now changing fundamentally, suddenly you can generate your own electricity and even reverse the whole process and not take the current, but instead send it to the grid. In addition, you can actively work with your own consumption. And here, everywhere, we were totally asleep, in Europe they were working in this direction, figuring out how to develop distribution, creating new business models.
Why did we oversleep? That energy was cheap and there was a lack of pressure and it was the war that woke us up?
Back in 2008, the Russians stopped gas to Ukraine for the first time, and prices went up dramatically then too. Unfortunately, we did not learn enough from this and we bet on the fact that the situation will always be resolved somehow. But that was a mistake. At the same time, the German energiewende caught up with us, when they decided to phase out nuclear power plants and gradually replace them with renewables and gas. That last sentence doesn’t make sense to me.
Speaking of energy changes, what about small modular reactors? ČEZ wants to build one on the Temelín site by 2032. Is this a realistic path?
In 1981 a textbook by Josef Bečvář was published on nuclear power engineering, it was such a red book. There is already talk of modular reactors and this is still true today. You know, as František Hezoučký of the CTU says, nuclear reactors are to be reprimanded, you have to have respect for them, which should be reprimanded at the beginning of any debate on nuclear energy. You really can’t discount the high security requirements. Well, for a small reactor and for a large reactor you have basically the same rules for nuclear safety, radiation protection, physical protection, emergency preparedness. These rules must not be broken and they make any construction more expensive.
The more power you build, the more likely you are to dissolve the high costs of safety. And you can partly get around this by building 20 smaller reactors of essentially the same type instead of one big reactor. But then you have to have twenty territories where the company accepts it, where you will be provided with electricity or heat. Consider that we are not able to build a wind power plant or a waste incinerator in the Czech Republic, so I can’t imagine a small nuclear power plant going through.
ČEZ wants to build them on the sites of former coal-fired power plants.
That doesn’t play much of a role, it’s something completely different, we’re talking about a nuclear device. Here not only the infrastructure plays a role, i.e. power output, cooling water and so on, but also the suitability of the site in terms of e.g. seismicity. EIA looks different, you are also governed by the Atomic Energy Act.
So it’s impossible?
It’s solvable, but extremely challenging. You can reduce construction costs, at least in theory, by building many smaller reactors of the same type. But then you also need to reduce the costs of licensing and permitting. An interesting idea is that a pan-European project would be created, a bit like Airbus, and national regulators would agree to accept uniform licensing conditions and not add anything specific to any one country. This is not the case today, every procedure and permitting is different and very different, which can increase the price by tens of percent. If a unified project with twenty identical reactors across Europe was devised, it would suddenly make much more sense. I would trust that solution.
That doesn’t sound very realistic to me.
I don’t know… The cost will be really high, let’s not be fooled by the word small modular reactor, it does not mean small cost. It is not impossible, but the right way to go, in my opinion, is a single European solution. However, there will still be a reluctance by residents to have something in their backyard, as long as nothing happens around me, no matter how far away they build. That’s for another debate, but it’s a serious problem.
But there are already some modular experiments in the world, aren’t there? Like the Akademik Lomonosov in Russia.
Not exactly. The closest thing to modular reactors today in principle are the AP1000 reactors from the American company Westinghouse. The project is designed so that as many modules as possible are made not on site, but at the manufacturer. But it’s still a thousand megawatts of power, so you can’t talk about a small reactor. This is defined to a capacity of about 300 megawatts. And as for the Akademik Lomonosov, which works as a power plant, that is a very specific solution, very expensive and I would not take into account anything coming from that part of the world today, it is an unworkable solution for Europe.
There is sometimes talk of a nuclear renaissance in Europe. Will the old continent really find its way back to it? Even in the light of the green deal initiative?
I think it’s already happening. In the run-up to the green deal and the taxonomy issue, a debate has arisen on how to deal with nuclear power and gas, and this is essentially ongoing. But the basic idea of the green deal is not about technology, it is about the fact that human activity will always put a strain on the planet and we should try to put as little strain on it as possible. The main thing is to pass the Earth on to the next generation in the best possible condition. The implementation of this strategy will always be totally different in the Czech Republic and in the Netherlands or Denmark. The conditions in each country are different and the chosen route should be adapted accordingly. Therefore, nuclear power is not and will not be a solution for all. In any case, we certainly have the technological capacity to reduce pollution dramatically – and it is not just CO2, but other pollutants as well.
Are we doing it?
We don’t.
Right. Moreover, we are also having a rather negative debate.
I agree. As long as we keep talking about it in the way that the evil Brussels invented the green deal, we will get nowhere. Fortunately, the current government doesn’t do that much anymore. But the key is to start living it. We cannot say that the government will complete Temelín and Dukovany and we are done. No way. Take last year and the gas crisis. The whole of society, every single one of us, has managed to reduce our consumption by 15 percent without in any way reducing our quality of life. And it wasn’t government bans that caused it, but rising prices that created pressure, and people realised they didn’t have to heat like they used to. It is similar with the green deal, we all have to participate in it. It’s not about some miraculous big solution, it’s about a lot of little things. However, this does not mean that we will have to close businesses, as is sometimes said. We have the means to adapt and do things smarter.
Yes, but there is still too much talk from business about how we will lose competitiveness because of the green deal and how we have dark prospects ahead of us. We certainly hear that more often than we hear that this is a great opportunity for innovation and for success in the world.
If you want to succeed in the world, it is good to have a strong base at home, which is not always easy in the case of energy and more progressive solutions. Until the spring, I was the CEO of Tedom, a company that develops and manufactures cogeneration units (equipment for combined local production of electricity and heat from gas or biogas – ed.), and it needed to establish itself at home before it could go out into the world. But it’s not just that, take solar panels. We import them in bulk from China, I don’t think that will change, but we can make some of the parts and solutions ourselves. For example, how to make the most of the power generated in summer and during the day so that they do not need to be disconnected. In short, we need to focus on how to use the changes that are happening and will happen for ourselves, not how to dig in and hold on to the status quo. That is not the way to go, and it applies to both the energy industry and business in general.
But why do the status quo advocates prevail?
I’ve been all over Europe and Russia and I can conscientiously say that technically we are in a great position, we have good higher education, even if it sometimes doesn’t look like it from public debate. But we still have not been able to create the structure or the background to be able to make sufficient use of all these assets of ours, which is then written over and over again. Fortunately, at least now we have a government that doesn’t throw sticks under the feet of change and talks more about the advantages than the disadvantages.
I myself am an example of a certain transformation. I bought Orgrez five years ago because I saw the changes happening in the energy industry everywhere west of us. And I said to myself, there’s an opportunity to be a part of it. But beware, modern energy is not opposed to the so-called old one, because it will not disappear, part of it will stay with us for a long time. The coexistence of old and new technologies is necessary.
And what is this new, more modern energy sector?
The main thing that will change is the position of the individual links in the whole system. Households, individual companies or housing associations will gradually learn that energy can be managed and that they can balance production, consumption, consumption and sales. This is a fundamental change. Then there’s the concept of community energy, which you have to combine with options such as cogeneration and waste incineration, more heat pumps, solar energy… Sure, you won’t solve a hundred percent of the consumption, there will always have to be large sources and a central distribution system, but maybe 20 or 30 percent of the energy will be solved locally.
I assume you would like to be the one to help get the shared and smart energy system moving and connect the individual links.
Yes, we’re ready. Laws are gradually changing, and a law that will allow community energy is going into its second reading, so hopefully this concept and the business models based on it will soon be able to develop in our country as well. They already know how to do it abroad, they haven’t fallen asleep there. But it is also related to the development of the distribution network, because, as I said, it was historically built in such a way that the power flows smoothly and steadily from the power plants to your home, not the other way around and in fluctuations.
So you’re going to manage my consumption at home and with the neighbours one day?
If you are connected to the internet, we can theoretically solve the electricity problem in your home today. When community energy is approved, it will be possible to take it to the next level, so that you can prospectively exchange, for example, the surplus from solar panels with your neighbour. Or another example. The municipality is installing photovoltaics on the roof of the school, which will produce the most electricity in the summer when no one is studying there. So he sends it to the neighbouring village to heat the pool where the whole village goes swimming.
And companies like yours will calculate it and will “organize” when, from whom and where it should flow and will take a commission from the saved consumption?
That’s right. We can already do it at the level of households and businesses, if you have a swimming pool, solar panels, a pump and perhaps an electric car, it can be interesting to work with. For example, models that work with weather forecasts can also be plugged in. Of course, if we are talking about consumption of a few kilowatts per day, it is not commercially interesting, the magic is as always in the higher volume.
Clearly, we will need to start thinking about energy in a much different way.
Absolutely. I’ll say a bold thing. Consider that you have a company with energy-intensive production that has roofs fitted with photovoltaics. The all-work holiday there is traditionally in the summer. However, it may one day have to consider taking company time off in the winter until Three Kings Day, but not in July and August when it can go full bore with electricity from its own power station. Moreover, we are still talking about generation and whether it is nuclear or renewables, but it is also about storage, distribution, transmission. There are many opportunities waiting everywhere.
What led you to buy Orgrez in the first place? You’ve always been a manager, haven’t you?
I have always been in managerial positions. But when you earn some money, you start to consider what to do with it. I didn’t want to retire, so I bought an Orgrez. It was a very well run and well managed company. And there, by the way, I suddenly found out what many owners know – that you must not obstruct your managers.
Yeah, so you’re back to figuring out what to do with yourself pretty quickly.
In a way, yes. I stepped aside and went back to management work and went to manage the Tedom group for Igor Fait for more than two years. I came there when the Jet Investments fund bought the company. We subsequently launched a new strategy there, part of it, by the way, was just around the electricity business. The most visible part is TEDOM Energie, led by Jakob Odložilík, which is quite a bit heard about on the market today. We have also added Tedom Solution, which is again the installation of not only CHP units, but a system composed of photovoltaics, CHP units, batteries…. simply the installation of the system that most solves the customer’s energy problem.
But you’re no longer with the Tedom Group…
It’s more complicated, but there were no disagreements, on the contrary, we worked very well. To simplify, the modified qualification of what is and what is no longer an SME has played a role. Because I was the CEO of TEDOM Group, which is a big company, the European authorities could also see ORGREZ as a big company. And this would mean that we would have limited access to some subsidy titles. So I decided to prioritize my own business, as much as I regretted it.