Economy
EU sheds light on approval for Hungary's nuclear expansion project
The EC announced on 6 March this year that it green-lighted state aid for the construction of two new nuclear reactors in Paks (Paks II), as Budapest had made commitments to limit distortions of competition.
The Commission's state aid investigation found that Hungary will accept a lower return on its investment than a private investor would do. "The investment therefore involves state aid within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union (TFEU). These rules require state aid to be limited and proportionate to the objectives pursued in order to be approved," the EU executive said.
The 88-page document released today also showed that Hungary pledged to ensure that Paks II shall use any of the profits deriving from the activity of units 5 and 6 of Paks II nuclear power plant for only the following purposes:
Other key pledges:
The strategy for the trading of Paks II’s power output (excluding own consumption of Paks II) shall be as follows:
Front page photo by Ákos Stiller
The Commission's state aid investigation found that Hungary will accept a lower return on its investment than a private investor would do. "The investment therefore involves state aid within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union (TFEU). These rules require state aid to be limited and proportionate to the objectives pursued in order to be approved," the EU executive said.
"Hungary has demonstrated that the measure avoids undue distortions of the Hungarian energy market. In particular, it has made a number of substantial commitments to limit potential distortions of competition."
The conclusion of the investigation was that the measure notified by Hungary involves State aid is compatible with the internal market.The 88-page document released today also showed that Hungary pledged to ensure that Paks II shall use any of the profits deriving from the activity of units 5 and 6 of Paks II nuclear power plant for only the following purposes:
- The Paks II project, which is defined as the development, financing, construction, commissioning, operation and maintenance, refurbishment, waste management and decommissioning of two new nuclear EN 87 EN power units with VVER reactors 5 and 6 at Paks II NPP, Hungary. Profits shall not be used to fund investments in activities that are not within the scope of that defined project.
- The payment of the profits to the Hungarian State (for example by way of dividends).
Other key pledges:
- Hungary shall ensure that Paks II refrains from (re-)investing in the extension of Paks II’s own capacity or lifetime and the installation of additional generation capacities, other than those of reactors 5 and 6 of Paks II NPP. Should such new investment be made, they would be subject to separate State aid approval.
- Hungary shall ensure that Paks II’s power output trading strategy will be an arms-length commercial profit-optimising strategy which is carried out through commercial trading arrangements concluded through bids cleared on a transparent trading platform or exchange.
- Hungary shall ensure that the auction platform for Tier 2 is operated by Paks II and that offers and bids are equally available to all licensed or registered traders on the same market terms. The bid clearing system shall be verifiable and transparent. No restrictions shall be imposed on the final use of the electricity purchased.
- In addition, Hungary shall undertake that Paks II, its successors and affiliates are fully legally and structurally separated and subject to independent power of decision within para 52 and 53 of the Merger Jurisdictional Notice152 and shall be maintained, managed and operated independent and unconnected from the MVM Group and all of its businesses, its successors and affiliates and other State controlled companies active in the generation, wholesale or retail of energy.
The strategy for the trading of Paks II’s power output (excluding own consumption of Paks II) shall be as follows:
- Tier 1. Paks II shall sell at least 30% of its total electricity output on the day ahead, intraday and future markets of the Hungarian Power Exchange (HUPX). Other similar electricity exchanges can be used subject to the agreement or consent of the Commission’s services to be granted or refused within two weeks from the request by the Hungarian authorities.
- Tier 2. The rest of Paks II’s total electricity output shall be sold by Paks II on objective, transparent and non-discriminatory terms by way of auctions. The conditions for such auctions shall be determined by the Hungarian energy regulator, similar to the auctioning requirements imposed on MVM Partner [(decision 741/2011 of the Hungarian Regulator)]. The Hungarian energy regulator shall also oversee the conduct of these auctions.
Front page photo by Ákos Stiller
