The European Commission (EC) has agreed to allow Poland to provide state aid for the construction of the country’s first nuclear power plant. “We will soon have official confirmation that the European Commission agrees to state aid for the construction of a nuclear power plant in Poland,” Polish Prime Minister Donald Tusk said. The EC said it had “approved, under EU State aid rules, an aid package to support the construction and operation of the first nuclear power plant in Poland”.
In November 2022, the then Polish government selected Westinghouse AP1000 reactor technology for the NPP, to be built at the Lubiatowo-Kopalino site in the Choczewo municipality in Pomerania. An agreement setting a plan for the delivery of the plant was signed in May 2023 by Westinghouse, Bechtel and project company Polskie Elektrownie Jądrowe (PEJ) – a special-purpose vehicle 100% owned the State Treasury).
In September 2023, an engineering services agreement was signed with Westinghouse and Bechtel to finalise a site-specific design for the three-unit NPP. The total investment costs of the project are estimated to be about PLN192bn ($49bn). In July 2024, the Ministry of Climate & Environment issued a decision-in-principle for PEJ to construct the plant. According to the draft update of the Polish Nuclear Energy Program (PPEJ – Program Polskiej Energetyki Jądrowej) commercial operation of the first unit is to begin in 2036.
In September, PEJ was issued a permit by the Pomeranian Voivode (local governor) for preparatory work related to the construction of Poland’s first NPP. PEJ explained that the activities would be implemented in an area of approximately 330 hectares in two stages. The permit applies to the first stage of activities and covers the demarcation of the area, fencing of the area, removal of vegetation, as well as development and levelling of the area.
Tusk said EC approval was a necessary condition for launching the Polish nuclear programme. “We will indeed be able to begin construction with sufficient momentum, so that electricity from the first nuclear power plant in Poland can flow as quickly as possible,” he said. “We have secured the full amount of funding, amounting to PLN60bn. He added that the first PLN4.6bn in treasury securities will be made available to PEJ before the end of the year.
In September 2024, the Polish government notified the European Commission (EC) about its intention to support investment in the plant with an equity injection of about €14bn to cover 30% of the project’s costs as well as state guarantees covering 100% of debt taken by PEJ to raise the investment. There would also be a two-way contract for difference (CfD) providing revenue stability over the 60-year lifetime of the plant. The following December, the EC opened a formal investigation into Poland’s proposed support package for the project.
During the investigation, the Commission said it had received several comments from interested third parties, which broadly supported the project and highlighted its strategic importance. Poland revised key elements of the aid package to address the Commission’s concerns. The EC said Poland committed to several significant adjustments:
- A shortened duration of the direct price support. The period of the CfD was 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.
- 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.
- To prevent overcompensation, Poland 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.
- To mitigate risks related to market concentration and to prevent the aid from being passed through to consumers, Poland 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 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.
Energy Minister Miłosz Motyka noted that the EC decision had been made “in record time and, importantly, in accordance with the expectations of the Polish side”. The EC approved state aid for the project “in less than 12 months … almost twice as fast as the last such decision in Europe”. He added: “Nuclear energy will be a key component of Poland’s energy mix. Today we take a crucial step toward this goal. Nuclear power will become the cornerstone of Poland’s energy security and will drive our economic growth.”
Marek Woszczyk, President of the PEJ Management Board said the EC’s decision “in its present form and in such a swift manner is a major success for Poland and demonstrates exemplary cooperation between the government administration and the state-owned company”. He added: “It paves the way for signing the construction contract with the consortium of US companies Westinghouse (technology vendor) and Bechtel (construction contractor).”
