Czech utility CEZ has cancelled procurement procedures for construction of two new nuclear units at Temelin nuclear power plant, where it already operates two reactors.

The utility said two consortia that were still in the procurement process -Westinghouse Electric Company LLC with Westinghouse Electric Czech Republic, and Škoda with Atomstroyexport and Gidropress – had been informed about the cancellation. It also notified Areva, which been an earlier contender.

The company blamed "turbulence" in European electricity markets. "While originally the project was fully economically feasible given the market price of electricity and other factors, today all investments into power plants, which revenues depend on sales of electricity in the free market, are threatened", said Daniel Beneš, chief executive director of CEZ.

The decision follows an announcement by the Czech government, which said that in the light of continuing discussion about the future of the electricity sector in the EU, it does not currently plan to provide guarantees or a stabilisation mechanism that would underwrite construction of low-emission power plants.

However, the government said it supported further development of nuclear energy in the Czech Republic and promised to publish a new nuclear plan by the end of the year.

Benes added: "It does not mean that we have stopped nuclear power plant construction in the Czech Republic. The risk that within 20 years we will not be able to cover consumption of our country is still acute. However our plans will have to be adjusted to changes currently being prepared in Brussels. Apparently, in the future it will be necessary to cooperate closely with the state in order to secure further development of nuclear energy."