The Polish plan assumes the construction of a power plant with an electricity generation capacity of up to 3,750 MW by the Westinghouse-Bechtel consortium using the Westinghouse AP1000 technology, which would start operations in the second half of the 2030s. Cost? EUR 45 billion, or PLN 192 billion.
The government in Warsaw wants to contribute to the construction in three ways. The first is a capital injection – EUR 14 billion (30% of the project costs). The second – state guarantees covering 100 percent. debt incurred by Polskie Elektrownie Jądrowe (PEJ) to finance the investment project.
The third one is the so-called two-way contract for difference – designed to ensure repayment of the investment over the entire period of operation of the power plant, i.e. 60 years, by selling energy at a guaranteed price expected by the investor. If the owner of the power plant sold at a market price lower than the guaranteed one, the state treasury would compensate the difference. If, in turn, the market price was higher than the guaranteed one, the state treasury would receive the surplus.
The European Commission will assess the compliance of this package with EU state aid rules.
The EU cannot prohibit Poland from building a nuclear power plant
– In principle, the European Commission cannot block Poland or another country from building a nuclear power plant – a Commission official who knows the legal issues of the EU energy market well tells DW. The right of EU countries to independently and independently shape their energy policy results from Art. 194(2) of the Treaty on the Functioning of the European Union (TFEU) and it is solely up to Poland, Spain, Germany, Hungary and Slovenia how they will shape their energy mix and use natural resources. Therefore, the competences of EU capitals also include supporting the development of nuclear energy.
But state aid as such is prohibited in the EU – with exceptions – pursuant to Article 107(1) TFEU. When joining the EU, each country adopted EU law and decided to coexist in the common market. This is to prevent excessive support by Member States for important investments affecting the market of the entire community.
I Union, pursuant to Art. 107 section 3 letter c) TFEU, which concerns nuclear energy, has the right to analyze and assess the financial contribution of Poland and all other member states to the construction of nuclear power plants. And pursuant to Art. 108 (2) TFEU – is obliged to initiate a formal investigation if it has doubts about the compliance of this contribution with EU rules.
Therefore, the EU wants to check whether the support system designed by Poland will not place the entities constructing Lubiatowo-Kopalino in a too favorable market situation – in such a case, the level playing field would be violated – equal opportunities for everyone – towards e.g. producers of wind energy, solar energy or other producers nuclear energy.
And these – as our interlocutor says – are “politically very sensitive matters”. – We are talking about billions of dollars from taxpayers' pockets and the idea is that this support system should be limited to the minimum necessary to protect taxpayers' pockets – he explains.
Aid from the State Treasury
However, there are investments of such size that they have no chance of success without the help of member states. They are not profitable on their own, and in practice many of them are built with public support, and the European Commission does not interfere, but – as the DW interlocutor adds – accepts the fact that “with such a high investment risk, state support is needed.”
Moreover, in the information regarding the Polish power plant, the Commission itself admits at the stage of preliminary assessment that “the aid package is necessary and has an incentive effect.” The EU communiqué states that a nuclear power plant “would increase the security of electricity supply in Poland and neighboring countries, contributing to the decarbonization of the energy sector and the diversification of the Polish energy mix.” Both the sense of building the power plant and the sense of supporting it by the state are not questioned. It's about the amount of support itself.
How will the EU examine government support?
The Commission will therefore assess, among others: appropriateness and proportionality of the aid package, it will also check whether a 60-year contract for difference is not too much – as was the case with the Czech plan to expand the Dukovany power plant. Following the EC's comments, the Czechs introduced changes and in April 2024, Brussels gave the green light. The following issues will also be assessed: minimizing market disruptions, decarbonisation, fuel replenishment and maintenance. – In line with competition rules, we will also assess the impact on the EU's internal energy market. As usual, all interested parties can submit their comments, said Teresa Ribera, Executive Vice-President of the European Commission.
The former Spanish Minister of the Environment, and then Deputy Prime Minister and Minister for Ecological Transformation, fought for the end of nuclear power in her country in 2035, but, as we hear in Brussels, she is “turbopragmatic”. The fact that it has phased out nuclear power in a country with great potential when it comes to gas and solar energy does not mean that it will block nuclear power in Poland, which has different resources, a different energy mix and a different state of infrastructure. Polish Minister of Industry Marzena Czarnecka recently met with Ribera regarding Polish coal and nuclear mines.
Who can submit comments?
How do interested parties know about the proceedings? The EC publishes its decision – together with a summary of the facts and preliminary assessment – in the Official Journal of the EU. The “interested party” may be competitive companies, other energy producers, non-governmental organizations and member states – such as Austria, which has abandoned nuclear energy and opposes their creation or expansion in neighboring countries. However, with poor results – in November 2022, a European court dismissed the case regarding the new Hungarian Paks II nuclear power plant, financed by Hungary and Russia.
The parties have one month to prepare their comments. Is the critical assessment of the European Commission, comments of other EU countries or NGOs binding on Poland? Legally – no. Poland simply needs to answer questions and try to clarify doubts – and such correspondence talks will continue until a consensus is reached, just like at a stock exchange or fair: one side enters into a transaction with an inflated price, the other fights to lower it, they meet – in the best variant – in a place satisfactory for both.
Force a reduction in support?
Paradoxically, the very opening of the proceedings by the European Commission and the subsequent clarification of positions may make things easier – approved public aid is a weapon in the hands of a Member State. Ignoring the Commission's decision and supporting the construction with an amount higher than the agreed amount would mean – as our interlocutor puts it – “riding it wrong”. The Commission could take Poland to the Court of Justice of the European Union, because unapproved aid is prohibited aid and is subject to repayment.
– But no country will risk something like that with an investment worth several dozen billion zlotys. No private investor would take such a risk if he was afraid that he would have to return such aid later, says an EU official.