Tuesday 7 March 2017

EU clears Hungarian state aid for Russian-backed nuclear power plant

The European Commission has approved Hungary’s financial support for the construction of two new nuclear reactors.

The Hungarian Government plans to provide funding for the 2,000MW Paks II nuclear power plant, replacing the four reactors currently operating at the Paks site which were built in the 1980s.

It is also backed by Russia, with the nation providing part of the €12.5 billion (£10.8bn) investment.

The four reactors currently account for around 50% of the nation’s domestic electricity production.

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

The Commission’s state aid investigation found Hungary will accept a lower return on its investment than a private investor would do and the measure limits potential distortions of competition.

Margrethe Vestager, Commissioner in charge of competition said: “The Commission’s role is to ensure that the distortion of competition on the energy market as a result of the state support is limited to a minimum. During our investigation, the Hungarian Government has made substantial commitments, which has allowed the Commission to approve the investment under EU state aid rules."

The final deal for the Hinkley Point C nuclear power plant in the UK was signed last year.