CYIL vol. 15 (2024)

EVELYNE AMEYE First, a necessity assessment is not carried out in the abstract. The necessity of aiding Dukovany II strictly relates to its objectives: addressing supply security concerns, energy diversification, decarbonization, 2050 climate neutrality goals, job creation, and industrial competitiveness. 17 Second, when checking the necessity of the planned aid to Dukovany II , the European Commission took account of the fact that Czechia had duly examined alternatives to investing in nuclear energy for securing a low-carbon energy mix, e.g., investing in renewable energy sources or gas power generation, or increasing imports. 18 Third, the European Commission took into account the fact that Czechia had duly examined alternative financing mechanisms instead of its proposed package of three support measures. 19 Firstly, the Czech government analyzed whether a tax credit scheme similar to the ones that it had used for renewable energy infrastructure would provide sufficient incentives for investments. However, it considered that such schemes had too large an impact on the national budget and were unsuitable for securing long-term project-specific investments due to the major changes in market conditions and electricity price fluctuations. Secondly, the Czech government analyzed whether capacity mechanisms would provide sufficient incentives for investment. Yet, capacity mechanisms aim to compensate plants for the readiness to supply electricity in pre-defined periods, regardless of whether they produce or not. They were, therefore, also not suitable for investments in nuclear power plants designed to provide stable and continuous low-carbon energy. Thirdly, the Czech government explored a regulated asset base (RAB) model, which is already used to regulate the price of electricity and gas transmission or distribution system services in Czechia. The RAB model would mean that the utility would have the right to charge electricity suppliers a regulated price in exchange for the construction and operation of the nuclear power plant. It would reduce risks throughout the life-cycle of the resource, from construction to decommissioning, whilst allowing third-party financing, as the risk of increase of the capital costs (CAPEX) and delays in completion would be shared between the state and the investor. However, the RAB model was not an option. Given that the envisaged operator of Dukovany II is Elektrárna Dukovany II, a wholly-owned subsidiary of the incumbent ČEZ, direct sales by that utility on the Czech market would likely cause competition concerns by reinforcing the incumbent’s position. Fourthly, the European Commission’s analysis of the necessity of the envisaged aid to Dukovany II considered whether each of the three proposed measures, taken individually, was necessary. It found that the proposed state loan covering a large part of the investment costs was necessary to allow a reasonable return on investment 20 and that the planned power purchase agreement was necessary to guarantee that Dukovany II would produce electricity and sell it at a price allowing ČEZ to reimburse the state loan; and that the envisaged 17 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 (162) to (164) and (12) to (17). 18 Idem, recitals (18) to (22) and (162) to (164). 19 Idem, recitals (23) to (31) and (163). 20 Idem, recital (27). The Czech government stressed that in 2014, a tender for the completion of the Temelín nuclear power plant was cancelled specifically due to the fact that there was no guarantee of return on investment.

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