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EC clears investment in Paks II nuclear power plant in Hungary

Staff Writer | March 7, 2017
The European Commission has concluded that Hungary's financial support for the construction of two new nuclear reactors in Paks (Paks II) involves state aid.
Paks II
Nuclear in Europe   To limit distortions of competition
It has approved this support under EU state aid rules on the basis of commitments made by Hungary to limit distortions of competition.

Hungary plans to grant investment support for the construction of two new reactors on the Paks site in Hungary.

They aim to replace the four reactors currently operating at the Paks site, which were constructed in the 1980s and currently account for approximately 50% of Hungary's domestic electricity production.

Hungary considers that the construction of Paks II is necessary to replace phased out generation capacity and to address the need for new capacity.

Under the EU Treaties, Member States are free to determine their energy mix and have the choice to invest in nuclear technology.

The Commission's role is to ensure that when public funds are used to support companies, this is done in line with EU state aid rules, which aim to preserve competition in the Single Market.

The Commission's state aid investigation found that the Hungarian State will accept a lower return on its investment than a private investor would do. The investment therefore involves state aid within the meaning 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.

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.