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South Korea's KHNP preferred to France's EDF

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KHNP to build two new units, more possible

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Prague plans to sign deal with KHNP in Q1 next year

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For a FACTBOX on KHNP's winning bid, click here

(Adds electricity price detail, KHNP comment, background in

paragraphs 5, 9-12, 19)

By Jason Hovet

PRAGUE, July 17 (Reuters) - The Czech government on

Wednesday picked South Korea's KHNP to build two new nuclear

power units, with the possibility of more, after a lengthy

tender aimed at keeping a big role for nuclear power in the

country's energy mix for decades.

Korea Hydro & Nuclear Power (KHNP) was picked over rival

French bidder EDF, despite lobbying for EDF from French

President Emmanuel Macron.

Prague earlier this year widened the tender, which is run by

70%-state-owned energy company CEZ, to have the option

to build multiple units, up from an originally planned one.

Under the plans, KHNP will build two new units at CEZ's

Dukovany nuclear plant, and they will discuss an option for two

more units at the Temelin power station.

The price for one new unit when building two at the same

site was estimated at 200 billion crowns ($8.65 billion) at

current prices, the government said, adding it suggested the

price of electricity generated would be less than 90 euros per

megawatt hour (MWh).

Contract details will be worked out by the first quarter

next year before being signed, officials said.

"The Korean offer was better practically in all assessed

criteria," Czech Prime Minister Petr Fiala told a news

conference.

"We will build two blocks at Dukovany, and in this direction

there will be negotiations. And we will discuss about options

for another two blocks at Temelin about which we will be able to

decide in the future."

KHNP has helped put several new reactors online in recent

years, including the Arab world's first nuclear power plant in

the United Arab Emirates. The Czech deal will offer another

foothold in Europe.

In 2022, KHNP agreed with a Polish consortium to develop new

nuclear reactors but that project is still uncertain.

KHNP CEO Whang Joo-ho said in a statement the company would

enter final negotiations to "ensure that the APR1000 reactor is

actually built in the Czech Republic", referring to its reactor

model.

EDF, Europe's only builder of nuclear reactors. has not

completed construction of a new unit since 2019 amid project

delays.

The decision represented another setback for the French

nuclear sector after Poland, in a separate deal, chose

Westinghouse over EDF for a plant on the Baltic Sea in 2022.

NUCLEAR POWER EXPANSION

The Czech government had the final decision on the tender

due to national security considerations and cost, which is too

high for CEZ - even with a market capitalisation of $20.1

billion - to shoulder alone.

The central European country will lean more on nuclear power

as it phases out coal in the coming decade. Nuclear is seen

composing half the country's generation mix in the future, up

from around a third now.

CEZ aims to start construction of the first new unit at

Dukovany later this decade, with expected completion in 2036.

The government and CEZ widened the tender's scope to help

lower the price of each block in what is expected to be the

country's largest energy investment to date.

CEZ has agreed a financing model with the government for the

first new unit at Dukovany, including low-interest loans and a

scheme for pricing of produced electricity - called a contract

for difference - to guarantee CEZ a return.

The European Commission has given approval to the state aid

for the first unit and will still have to sign off on aid plans

for further units. The Czech Finance Ministry aims to have a

financing model for further units agreed by the end of the year.

($1 = 23.1240 Czech crowns)