Nuclear Politics

Czech Republic / European Commission To Investigate State Support Scheme For New Dukovany Plant

By Kamen Kraev
1 July 2022

ČEZ aims to start building new reactor in late 2020s
European Commission To Investigate State Support Scheme For New Dukovany Plant
Dukovany has four VVER units that began commercial operation in the 1980s. Courtesy Dukovany NPP.
The European commission announced it has opened an investigation into whether the public support mechanism proposed for the Dukovany II nuclear new-build project in the Czech Republic fulfils the European Union (EU) rules on state aid.

Czech state-controlled utility ČEZ wants to build a new Generation III pressurised water reactor unit with a capacity of up to 1,200 MW at the existing Dukovany nuclear site in the southeast of the country.

In March, the company launched a tender process to choose a supplier for the new-build project. Construction of the new unit should begin in 2029 and be completed by 2036.

In 2020, the Czech state, which holds a 70% stake in ČEZ, approved plans to give an interest-free loan for to finance the new plant. Estimations say the load would be valued at about €7.5bn ($7.8bn).

The state also approved a model to buy electricity from the new unit at a fixed price, with consumers making up the difference if that price is higher than wholesale market prices.

EU rules on state support and competition require an assessment of all proposed state support schemes for large-scale investment and the Commission’s move was expected by observes.

The EC said yesterday that it will be looking into the low-interest loan, fixed-priced purchase agreement, and a mechanism to protect ČEZ and the state in case certain unforeseen events occur.

The Commission said that at this stage it considers the Dukovany II project necessary and the proposed support scheme facilitates its development.

However, it said doubts remain on whether the Czech measure is fully in line with EU state aid rules, mainly because it is important to ensure that no more support is given than is ultimately necessary, and impact on market competition is kept to the minimum.

According to the Commission, there are also doubts on whether there could have been other companies interested in being project developers instead of ČEZ, and whether the future state-owned company selling electricity generated from the project will actually aim at maximising its profits.

In 2017, after about two years of investigation, the EC cleared plans by Hungary to finance the expansion of its Paks nuclear station by means of a Russia loan and without a supplier tender.

The Czech Republic has six commercially operational reactor units that provide about 37% of its electricity generation.

There are four Russia-designed VVER-440 reactor units at the Dukovany site and the government has said they should be replaced by new ones in about 20 to 30 years. In addition to the four units at Dukovany, there are two VVER-1000 units at Temelín.

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