The European Commission has approved, under EU state aid rules, a package of aid to support the construction and operation of Poland’s first nuclear power plant. The nuclear power plant, with a capacity to generate up to 3,750 MW of electricity, is expected to start operating in the second half of the 2030s. The project plays a central role in Poland’s strategy to decarbonize electricity generation.

Poland’s measure

In September 2024, Poland notified the Commission of its plan to support Polskie Elektrownie Jądrowe sp. z o.o. (“PEJ”), a 100% state-owned company, in the construction and operation of a new nuclear power plant in Lubiątowo-Kopalino. The project consists of three new nuclear reactors, each with a capacity of 1250 MW. The total capital costs of the project are estimated at around €42 billion (PLN 178 billion) in nominal terms.

Poland plans to provide direct price support in the form of a two-way contract for difference, which guarantees stable revenues for the nuclear power plant for a period of 40 years. Under the contract for difference, the Polish State will pay PEJ if market prices fall below a certain price, which will be determined according to a clear methodology reviewed by the Commission. If market prices exceed this price, PEJ will pay the difference to the Polish State. The beneficiary will also benefit from a capital injection covering approximately 30% of the project costs and state guarantees covering 100% of the debt incurred by PEJ to finance the project, reflecting Poland’s assumption regarding the financial structure of the project.

The Commission’s investigation

In December 2024, the Commission opened a formal investigation into the package of measures proposed by Poland to support the nuclear power plant project. The investigation focused on the relevance and proportionality of the aid, potential distortions of the electricity markets, and the compatibility of the measure with applicable EU law. During the investigation, the Commission received a number of comments from interested third parties, which were generally supportive of the project and highlighted its strategic importance for Poland’s long-term energy security and decarbonization goals. For its part, Poland is reviewing and modifying key elements of the aid package to address the Commission’s concerns.

To ensure that the aid is appropriate, proportionate, and does not unduly distort competition in the internal market, Poland has committed to several significant adjustments:

• Shortened duration of direct price support. The duration of the CfD is reduced from 60 to 40 years.
• Revised remuneration formula: The design of the CfD has been revised to ensure strong incentives for PEJ to operate the plant efficiently and use its ability to respond to market signals. This design, whereby the power plant receives remuneration for its readiness to produce electricity rather than for the electricity produced, helps to limit distortions and avoids displacing renewable energy production, supporting a more efficient and decarbonized electricity system.
• The exercise price is calibrated to the project’s funding gap: Poland will determine the exercise price of the CfD using a ‘discounted cash flow’ model that takes into account the capital invested and the state guarantees provided, ensuring that the total aid is limited to the project’s funding gap. The financial model also ensures that PEJ will receive a rate of return in line with the requirements of market investors for a comparable project, thus ensuring the proportionality of the State aid.

To prevent overcompensation, Poland has introduced a special control mechanism whereby any additional profits exceeding those necessary to achieve a market rate of return must be shared with the Polish State. This mechanism will apply throughout the entire period of operation of the plant. In addition, Poland will conduct regular reviews of a clearly defined set of variable costs used in the financial model to determine the exercise price. This process will ensure that uncertainty about the project’s capital and operating costs does not lead to overcompensation of the beneficiary.

In order to reduce the risks associated with market concentration and to prevent the aid from being passed on to consumers, Poland agrees to comply with strict conditions regarding electricity trading. At least 70% of the plant’s annual electricity production will be sold on the open energy exchange — covering day-ahead, intraday, and futures markets — throughout the plant’s lifetime. The remaining production may be sold through tenders conducted under objective, transparent, and non-discriminatory conditions. Poland also commits to ensuring that PEJ will be legally and functionally independent from other major operators on the Polish electricity market.

On this basis, the Commission concludes that the Polish measure is in line with EU state aid rules.

Context

Under the 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 matter of national competence.

State aid to support nuclear energy can be assessed directly under Article 107(3)(c) TFEU, which allows Member States to facilitate the development of certain economic activities under specific conditions.

The support must be necessary and proportionate and must 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 principles for the design of two-way CfDs set out in Regulation 2024/1747.

For more information

The non-confidential version of the decision will be published under case number SA.109707 in the State Aid Register on the Commission’s Competition website once any confidentiality issues have been resolved.