CYIL vol. 15 (2024)

CYIL 15 ȍ2024Ȏ STATE AID BY CZECHIA TO DUKOVANY II the Dukovany II project, consisting of the construction of a new nuclear power plant at the nuclear site of Dukovany. Under the terms of this agreement, ČEZ would organize a tender to choose a reactor supplier, negotiate all contracts, and obtain all required permits, whereas Elektrárna Dukovany II would operate the new Dukovany II nuclear plant, which is expected to start commissioning in 2036 and operate for 60 years. 2. The envisaged state aid by Czechia to Dukovany II In March 2022, the Czech government notified the European Commission of its plan to support the construction and operation of Dukovany II with three support measures to cover the construction of Dukovany II as well as the commissioning and operation of the new power plant. 2 First, Elektrárna Dukovany II would benefit from a low-interest repayable state loan that would cover almost all construction costs, estimated in 2020 at € 7.74 billion. ČEZ would only contribute around € 180 million with equity. Zero interest would be due in the construction phase. Second, the Czech State would provide direct price support through a long-term power purchase agreement between Elektrárna Dukovany II and a state-owned special purpose vehicle that would commit to buy all electricity produced at Dukovany II during 60 years at a predetermined price - reflecting construction, operation and decommissioning costs – in order to resell it to the electricity wholesale market and, hence, ensure stable revenues for 60 years. Third, ČEZ and Elektrárna Dukovany II would benefit from a safeguard mechanism that would protect them during the entire investment period against unanticipated events, like a change in Czech law or policy impeding the implementation of the project. The European Commission considered that all three support measures, which had been planned together, were inextricably entangled, inseparable, and mutually enhanced each other. Given this interdependency, the Commission decided to examine all three measures jointly as a single state aid measure. In its view, it would have been legally incorrect not to consider the reduced construction risks brought about by the state loan and the safeguard mechanism when examining the aid provided through the power purchase contract. 3 3. Applicable rules to state aid in the nuclear sector. There are no specific rules for state aid in the nuclear sector. General state aid rules of the Treaty on the Functioning of the European Union (TFEU) apply. According to those general rules, state aid is incompatible with the TFEU if the aid (i) is imputable to the state and involves state resources, (ii) confers a selective advantage to certain 2 The three measures are described in detail in the European Commission’s Invitation to submit comments pursuant to Article 108(2) of the TFEU, “State Aid – Czechia State aid SA.58207 (2021/N) – Support for the construction and operation of a new nuclear power plant at the Dukovany site” (2022/C 299/02); https://eur-lex.europa.eu/ legal-content/EN/TXT/PDF/?uri=CELEX:52022XC0805(04), OJ of 5.8.2022, C 299/5. 3 European Commission’s Invitation to submit comments pursuant to Article 108(2) of the TFEU, “State Aid – Czechia State aid SA.58207 (2021/N) – Support for the construction and operation of a new nuclear power plant at the Dukovany site” (2022/C 299/02); https://eur-lex.europa.eu/legal-content/EN/TXT/ PDF/?uri=CELEX:52022XC0805(04), OJ of 5.8.2022, C 299/5, recitals (143) and (144).

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