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European Commission approves State aid to support construction of Czech nuclear power plant

The European Commission has approved, under EU State aid rules, a Czech support measure for the construction and operation of a new nuclear power plant in Dukovany.

The country notified the Commission already in 2022 for a new nuclear unit with an electricity generation capacity of up to 1,200 megawatts (MW). The nuclear power plant is expected to be commissioned in 2036 for trial operations, while commercial operations are planned to commence in 2038. The plant will have an operating lifetime of 60 years and is planned to be decommissioned in 2096.

“Czechia will support the construction of a nuclear power plant in Dukovany,” said Margrethe Vestager, Executive Vice-President in charge of competition policy. “The Commission’s role is to ensure that the State aid proposed is targeted, proportionate and does not unduly affect the EU energy market. During our investigation, Czechia has modified the initial measure and submitted substantial commitments. This has allowed us to approve the aid.”

Since 2022, to ensure that there won’t be any distortion of the electricity market, Czechia introduced a remuneration formula akin to a two-way contract-for-difference, which provides revenue stability and limits excess remuneration through a yearly ex-post settlement. Secondly, it reduced the duration of the direct price support from 60 to 40 years. And, finally, it set the strike price on the basis of a discounted cash flow model ensuring that the total aid amount, taking into account the subsidised loan, is limited to the funding gap of the project.

Moreover, to address the risk of overcompensation, the country will implement a claw-back mechanism. It will ensure that any additional gains generated by the project will be shared with the Czech State. This mechanism will be in place over the entire operational lifetime of the plant.

Czechia has also committed to ensuring that at least 70 per cent of the power output will be sold on the open power exchange – namely, day-ahead, intraday and futures markets – over the entire lifetime of the power plant.

“Nuclear now provides more than a third of energy consumption in our country and in the future, it could be even half of it,” said Prime Minister Petr Fiala. “This development strengthens our energy security, self-sufficiency and also the competitiveness of our companies. […] It is the largest investment in the history of the modern Czech Republic.”

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