Commission approves State aid for the construction and operation of Poland’s first nuclear power plant

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The European Commission has approved, under EU State aid rules, an aid package to support the construction and operation of the first nuclear power plant in Poland. The nuclear plant, with an electricity generation capacity of up to 3 750 MW, is scheduled to start operating in the second half of the 2030s. The project plays a central role in Poland’s strategy to decarbonise electricity production.

The Polish measure

In September 2024, Poland notified the Commission of its plan to support Polskie Elektrownie Jądrowe sp. z o.o. (‘PEJ’), a fully State-owned company, in the construction and operation of a new nuclear power plant in Lubiatowo-Kopalino. The project consists of three new nuclear reactors, each with a capacity of 1250 MW. The total capital expenditure for the project is estimated at around €42 billion (178 billion PLN) in nominal terms.

Poland plans to grant direct price support in the form of a two-way contract for difference providing stable revenues to the nuclear plant for a period of 40 years. Under the contract for difference, the Polish state will pay PEJ if market prices fall below a strike price that will be determined according to a clear methodology reviewed by the Commission. If market prices exceed this strike price, PEJ will pay the difference to the Polish state. The beneficiary will also benefit from an equity injection covering approximately 30% of the costs of the project and of State guarantees covering 100% of the debt taken on by PEJ to finance the project, which reflects Poland’s assumption regarding the project’s financial structure.

The Commission’s investigation

In December 2024, the Commission opened a formal investigation into Poland’s proposed support package for the nuclear power project. The investigation focused on the appropriateness and proportionality of the aid, potential distortions in electricity markets, and the measure’s compliance with relevant provisions of EU law.

During the investigation, the Commission received several comments from interested third parties. These contributions broadly supported the project and highlighted its strategic importance for Poland’s long-term energy security and decarbonisation objectives.

During the in-depth investigation, Poland revised key elements of the aid package to address the Commission’s concerns.

To ensure that the aid is appropriate, proportionate, and does not unduly distort competition in the internal market, Poland committed to several significant adjustments:

• A shortened duration of the direct price support. The period of the CfD is reduced from 60 to 40 years.
• A revised remuneration formula: The design of the CfD is revised to ensure strong incentives for PEJ to operate the plant efficiently and to make use of its abilities to respond to market signals. This design, where the power plant is remunerated for its availability to generate electricity rather than for its electricity output, helps limit distortions and avoids displacing renewable generation, supporting a more efficient and decarbonised electricity system.
• The strike price is calibrated to the project’s funding gap: Poland will set the strike price of the CfD using a ‘discounted cash flow’ model that takes into account the equity injection and the State guarantees provided, ensuring that the total aid is limited to the project’s funding gap. The financial model also ensures that PEJ will receive a rate of return aligned with what market investors would require on a comparable project, thereby ensuring the proportionality of State aid.

To prevent overcompensation, Poland has introduced a dedicated control mechanism under which any additional profits exceeding what is necessary to achieve a market rate of return must be shared with the Polish state. This mechanism will apply throughout the plant’s entire operational period. In addition, Poland will conduct regular reviews of a clearly defined set of cost variables used in the financial model for determining the strike price. This process will ensure that uncertainties regarding the project’s capital and operational costs will not result in overcompensation for the beneficiary. 

To mitigate risks related to market concentration and to prevent the aid from being passed through to consumers, Poland has agreed to strict conditions regarding electricity trading. At least 70% of the plant’s annual electricity output will be sold on the open power exchange – covering day ahead, intraday and futures markets – throughout the lifetime of the power plant. The remaining output may be sold via auctions conducted under objective, transparent and non-discriminatory terms. Poland also committed to ensure that PEJ will be legally and functionally independent from other major operators in Poland’s electricity market.

On this basis, the Commission concluded that the Polish measure is in line with EU State aid rules.

Background

Under the TFEU, Member States are free to determine their energy mix, the conditions for exploiting their energy resources and the general structure of their energy supply. The decision to promote nuclear energy is a national competence.

State aid to support nuclear energy can be assessed directly under Article 107(3)(c) TFEU, which allows Member States to facilitate the development of certain economic activities under specific conditions. The support must be necessary and proportionate and must not adversely affect trading conditions to an extent contrary to the common interest. Following the entry into force of the new electricity market design rules in July 2024, the Commission also assesses compliance with the design principles for two-way CfDs laid down in Regulation 2024/1747.

For More Information

The non-confidential version of the decision will be made available under the case number SA.109707 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.