Czech project 'under the magnifying glass' – the European Commission has launched an investigation into the financing of Dukovany 2.

European Commission (EC) has officially opened an in-depth investigation into the Czech plan to finance the construction of two new nuclear reactors at the Dukovany Nuclear Power Plant. The main question of the investigation is whether the proposed state aid measures are proportionate and whether they protect investors too much at the expense of the free market, writes WNN

Even though the project is deemed necessary for decarbonization, the European Commission expresses doubts as to whether the 30 billion euro state aid is in line with EU competition rules. Specifically, the Czech Republic plans to support the company Elektrárna Dukovany II (which is 80% owned by the state and 20% owned by the ČEZ company) through three key measures: a state loan (low-interest refundable loan estimated at between 23 and 30 billion euros, which would cover full construction costs), a contract for difference (CfD) (a contract lasting 40 years that guarantees a fixed price for electricity: if the market price falls, the state pays the shortfall; if it rises, the plant returns the excess to the state), as well as guarantees that protect the project in the event of radical changes in state policy or unforeseen adverse impacts during decades of operation.

The EC, in a preliminary assessment, acknowledges that the project is justified because it helps diversify the energy mix, but "has doubts" regarding proportionality, risk, and market competition. 

The Czech Ministry of Industry and Trade described the opening of the investigation as a "standard step and an important milestone." The ministry notes that a similar process also affected the previous plan for a single reactor, and they expect Brussels to give the final green light in the first quarter of 2027. They emphasize that the project is currently operating under commercial terms, so there is no risk of delays.

This investigation comes at a time when the South Korean KHNP has already been selected as the technology supplier (APR1000 model) – the decision was published last summer. The French EDF, which lost the tender, filed appeals claiming that the Korean bid was unrealistically low due to "illegal state aid". But although Czech courts rejected those appeals, the European Commission continues to consider EDF's complaints under the Regulation on foreign subsidies.

But this is not the first time that the Czech project has faced pressure: the Czech Republic announced that KHNP had been chosen as the technology supplier last year, but pressure immediately began afterwards: at that time Westinghouse also filed a complaint because it believed that the Korean company does not have the right to offer this design to third parties without Westinghouse's license since it is a licensed product – a dispute between KHNP and Westinghouse lasted for years and was the subject of international arbitration. 

In any case – developments around the Czech project are a classic example of the clash between national energy priorities and EU rules. And the outcome of this investigation will be a key guideline for other countries in the region (including potential plans by Serbia) that could use similar models of state loans and financing of projects.