Poland: EU Commission investigates state aid for nuclear power plant

The European Commission has opened an in-depth investigation to assess whether public support that Poland plans to grant for a nuclear power plant in Lubiatowo-Kopalino is in line with EU State aid rules.

The Commission’s investigation

In September 2024, Poland notified the Commission of its plan to support State-owned company Polskie Elektrownie Jądrowe sp. z o.o (‘PEJ’) in the construction of a new nuclear power plant in Lubiatowo-Kopalino.

The new plant, with an electricity generation capacity of up to 3750 MW, is scheduled to start operating in the second half of 2030. The total investment costs of the project are estimated to be approximately €45 billion (PLN 192 billion). The plant would increase security of electricity supply for Poland and for neighbouring countries, helping the decarbonisation of the energy sector and diversifying the Polish energy mix.

Poland plans to support this investment through:

(i) an equity injection of approximately €14 billion covering 30% of the project’s costs;

(ii) State guarantees covering 100% of debt taken by PEJ to finance the investment project; and

(iii) a two-way contract for difference (‘CfD’) providing revenue stability over the entire lifetime of the power plant of 60 years.

At this stage, based on its preliminary assessment, the Commission has found that the aid package is necessary and has an incentive effect, as the beneficiary would not carry out the project without the public support. Nevertheless, the Commission has doubts at this stage on whether the measure is fully in line with EU State aid rules. For this reason, it has decided to open an in-depth investigation in relation to:

• The appropriateness and proportionality of the aid package. Given there are three different aid measures (equity, guarantees, two-way CfD) that together limit the risk for the beneficiary, it is important to ensure that overall no more aid than what is strictly necessary is ultimately granted. In particular, the Commission will examine further (i) whether the 60-year duration of the CfD is justified taking into account the other two measures, and (ii) whether there could have been other companies interested in leading the project which might have resulted in a smaller aid amount.
• The impact of the aid package on competition in the electricity market and whether this is kept to the minimum. The Commission will investigate whether the design of the two-way CfD sufficiently incentivises the power plant to operate and participate efficiently in the electricity markets, within its technical capacity. This is important to minimise market distortions, facilitate the integration of renewables, and allow the electricity system to move towards decarbonisation. In particular, the power plant should plan its maintenance and refuelling in an optimal way and adapt its power production to market prices. In addition, the Commission cannot exclude that the aid will not be passed-on to electricity consumers through direct contracts.

The Commission will now investigate further to determine whether or not any of these initial concerns is confirmed. The opening of the in-depth investigation gives Poland and interested third parties an opportunity to submit comments. It does not prejudge in any way the outcome of the investigation.

Background

Under the Treaty on the Functioning of the EU (TFEU), Member States are free to determine their energy mix, the conditions for exploiting their energy resources, and the general structure of their energy supply. The decision to promote nuclear energy is a national competence.

State aid for nuclear energy can be assessed and approved directly under Article 107(3)(c) TFEU, which enables Member States to support the development of certain economic activities under certain conditions. The support should remain necessary and proportionate and not adversely affect trading conditions to an extent contrary to the common interest.

Following the entry into force of the new electricity market design rules in July 2024, the Commission also assesses compliance with the design principles for direct price support schemes in the form of two-way CfDs set out in Regulation 2024/1747.

The non-confidential version of the decision will be made available under the case number SA.109707 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.