CYIL vol. 15 (2024)

EVELYNE AMEYE price. Importantly, the strike price will be set on the basis of a discounted cash flow model, ensuring that the total aid will take account of Czechia’s state loan to Dukovany II and will be limited to the funding gap. The calibration of the strike price, given the subsidized cost of debt and a proportionate cost of equity, ensures the aid’s proportionality. Dukovany II’ s shareholders will get a rate of return that would be similar to the market return that investors usually expect in comparable investments. Moreover, Dukovany II will charge the actual market price for every megawatt-hour of electricity produced. This provides Dukovany II with the necessary incentives to lower production and to proceed to maintenance and refuelling when the market price is on the low end and, vice versa , to increase production when the market price is on the high end. The claw-back mechanism avoids overcompensation and ensures that additional gains made by Dukovany II are shared with the Czech government during the power plant’s entire lifetime (60 years). Finally, in order to avoid any distortions of competition on the Czech and Core Region’s electricity markets, a minimum of 70% of the electricity produced at Dukovany II will be sold on open power exchanges (the day-ahead, intra-day or futures markets) during the plant’s entire lifetime (60 years). This precludes market concentration in the hands of incumbent ČEZ and avoids the special purpose vehicle granting selective advantages to large industrial electricity consumers. The remaining electricity will be sold in auctions on the basis of objective, transparent, and non-discriminatory terms. Following those changes, the Commission concluded that Czechia’s envisaged support measures were appropriate to achieve the objectives pursued, as well as proportionate as they were limited to the minimum necessary, while potential competition distortions would be minimized. On that basis, the Commission approved Czechia’s aid package to Dukovany II on 30 April 2024. 33 8. Conclusion With the renewed interest in nuclear power in the EU and globally, both through the construction of new nuclear power plants and the development of small nuclear reactors in the framework of the EU’s Green Deal and Net Zero policy, understanding how the European Commission applies EU state aid rules is key for EU governments and private investors, in particular, because nuclear power projects require large financial investments. To date both the European Commission and, upon appeal, the European Courts have been quite lenient towards state aid for nuclear projects and, given that the EU’s new taxonomy labels nuclear energy as “green”, this trend is unlikely to change. The European Commission’s assessment of the support measures envisaged by the Czech government for the Dukovany II project in the light of EU state aid rules represents key 33 This article went to press prior to the European Commission’s publication of the non-confidential version of its Decision of 30 April 2024 approving the state aid measures for the Dukovany II project. The non-confidential version of said decision will be published on the European Commission’s State Aid Register under case nr. SA.58207 once any confidentiality issues have been resolved: https://competition-cases.ec.europa.eu/search. The present analysis is of said decision is based on the European Commission’s press release IP/22/4244 of 30 April 2024, available at https://ec.europa.eu/commission/presscorner/detail/en/ip_24_2366.

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