AIDES D’ÉTAT – TCHÉQUIE — Aide d’État SA.117794 (2025/N) — Soutien à la construc

Journal officiel
de l'Union européenne

Série C

C/2026/2825

27.5.2026

AIDES D’ÉTAT – TCHÉQUIE

Aide d’État SA.117794 (2025/N) — Soutien à la construction et à l’exploitation de deux nouvelles unités nucléaires sur le site de Dukovany

Invitation à présenter des observations en application de l’article 108, paragraphe 2, du traité sur le fonctionnement de l’Union européenne

(Texte présentant de l’intérêt pour l’EEE)

(C/2026/2825)

Par lettre du 22 décembre 2025, reproduite dans la langue faisant foi dans les pages qui suivent le présent résumé, la Commission a notifié à la Tchéquie sa décision d’ouvrir la procédure prévue à l’article 108, paragraphe 2, du traité sur le fonctionnement de l’Union européenne à l’égard de l’aide/de la mesure susmentionnée.

Les parties intéressées peuvent présenter leurs observations dans un délai d’un mois à compter de la date de publication du présent résumé et de la lettre qui suit, à l’adresse suivante:

Commission européenne

Direction générale de la concurrence

Greffe des aides d’État

1049 Bruxelles

BELGIQUE/BELGIË

Stateaidgreffe@ec.europa.eu

Ces observations seront communiquées à la Tchéquie. Le traitement confidentiel de l’identité de la partie intéressée qui présente les observations et/ou d’éléments de ces observations peut être demandé par écrit, en spécifiant les motifs de la demande.

RÉSUMÉ DE LA DÉCISION

Les autorités tchèques ont notifié la mesure le 2 octobre 2025.

L’objet de la présente affaire est le soutien de l’État à la construction et à l’exploitation de deux nouvelles unités nucléaires sur le site de Dukovany (à savoir Dukovany 5 et Dukovany 6), d’une capacité maximale de 976 MWe chacune. La Commission avait déjà autorisé une aide à la construction et à l’exploitation d’un nouveau réacteur nucléaire unique sur le site de Dukovany par la décision C(2024) 2858 final de la Commission du 30 avril 2024 dans l’affaire SA.58207 (1). La mesure notifiée va au-delà du champ d’application de la mesure appréciée dans la décision précitée, pour ce qui est tant du nombre d’unités nucléaires concernées que de l’ensemble de l’aide, et nécessite donc une appréciation exhaustive distincte.

Le train de mesures d’aide comprend trois grands types de soutien:

—	un prêt d’État (aide financière remboursable) à faible taux d’intérêt et d’un montant initial actuel estimé entre 23 et 30 milliards d’EUR, couvrant l’intégralité des coûts de construction;

—	un contrat d’écart compensatoire (CEC) bidirectionnel d’une durée proposée de 40 ans afin de garantir des recettes stables à la centrale nucléaire;

—	un mécanisme offrant une protection face aux changements de politique et une protection supplémentaire contre les incidences négatives, pour répondre au risque inhérent à la durée prolongée, s’étendant sur toute la période d’investissement, de l’exposition aux changements de politique.

Le bénéficiaire de la mesure est une entité dénommée «Elektrárna Dukovany II» (EDU II), détenue par l’État tchèque (80 %) et le groupe ČEZ (20 %), seul exploitant de centrales nucléaires en Tchéquie. EDU II sera le promoteur du projet, chargé du contrôle stratégique et de la supervision de celui-ci, ainsi que le propriétaire et l’exploitant des nouvelles unités nucléaires. Elle sera également le bénéficiaire du prêt et la partie contractante du CEC, et bénéficiera de la protection contre les changements législatifs. En outre, EDU II a bénéficié d’un apport en capital de ČEZ destiné à financer les activités nécessaires au cours de la phase de développement du projet.

L’objectif de la mesure est de contribuer à la décarbonation du système électrique et de réduire le déficit de capacité qui devrait résulter de la mise à l’arrêt définitif des unités nucléaires et à charbon obsolètes en Tchéquie. Les principaux objectifs poursuivis sont la décarbonation, la diversification des sources d’énergie et la sécurité de l’approvisionnement.

Les travaux de construction devraient commencer en 2029, les réacteurs nucléaires nouvellement construits devraient être mis en service à partir de 2036 (Dukovany 5) et de 2037 (Dukovany 6) et leur durée de vie devrait être de 60 ans.

Dans sa décision d’ouvrir la procédure, la Commission a conclu à l’existence d’une aide au sens de l’article 107, paragraphe 1, du traité sur le fonctionnement de l’Union européenne (TFUE). En ce qui concerne la compatibilité de la mesure avec l’article 107, paragraphe 3, point c), du TFUE, la Commission a également conclu à l’existence d’une défaillance du marché et à la nécessité d’une aide pour le développement d’une activité économique.

Néanmoins, la Commission émet des doutes sur les éléments suivants de l’appréciation de la compatibilité:

—

le caractère approprié (combinaison des types de soutien, informations insuffisantes sur la protection contre les changements de politique et la protection supplémentaire contre les incidences négatives, ainsi que sur la conception du CEC) et la proportionnalité (durée du CEC, détails méthodologiques concernant la révision du prix d’exercice, révisions du prix d’exercice en rapport avec la protection contre les changements de politique et la protection supplémentaire contre les incidences négatives, analyse du rendement cible des capitaux propres, hypothèses de coûts sous-tendant le modèle financier, mécanisme de contrôle de la surcompensation) des composantes du train de mesures d’aide;

—	les limitations à la distorsion de concurrence sur le marché, et plus particulièrement la conception du CEC, ainsi que la question de savoir si les effets négatifs sur le marché seront bien réduits au minimum;

—	la conformité avec d’autres dispositions du droit de l’Union (conformité du CEC avec les principes de conception énoncés à l’article 19 quinquies, paragraphe 2, du règlement sur l’électricité).

(1) JO L, 2025/429, 12.3.2025, ELI: http://data.europa.eu/eli/dec/2025/429/oj.

TEXTE DE LA LETTRE

The Commission wishes to inform Czechia that, having examined the information supplied by your authorities on the measure referred to above, it has decided to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union (‘TFEU’).

1. THE PROCEDURE

(1)

Following pre-notification contacts, pursuant to Article 108(3) TFEU, the Czech authorities notified to the Commission on 2 October 2025 their intention to provide support to the construction and operation of two new nuclear units in Dukovany, Czechia (the “Project”, the “notified measure” or the “measure”).

(2)

By Commission Decision C(2024) 2858 final of 30.4.2024 (“the 2024 Decision”) in case SA.58207 (1), the Commission approved aid for the construction and operation of a single new nuclear reactor at the Dukovany site. The present notification is broader in scope, as it concerns an additional unit. The notified measure extends beyond the scope of the measure subject to the 2024 Decision, both in terms of the number of nuclear units concerned and the overall aid package and therefore requires a separate comprehensive assessment.

(3)

The Commission requested additional information on 16 October 2025, which the Czech authorities provided on 21 and 23 October 2025.

(4)

On 28 November 2025, the Czech authorities exceptionally agreed to waive their rights deriving from Article 342 TFEU, in conjunction with Article 3 of Regulation 1/1958 (2) and to have this Decision adopted and notified in English.

2. DESCRIPTION OF THE CONTEXT

2.1. Electricity generation in Czechia

(5)

Czechia’s electricity mix is currently dominated by coal- and nuclear-based generation. The following tables show the evolution of installed capacity and gross electricity generation between 2015 and 2024.

Table 1

Evolution of installed capacity in MW in Czechia from 2015 to 2024 (Source: Yearly report on the operation of the Czech electricity grid for 2024)

(6)

According to data published by the Energy Regulatory Office (“ERO”) of the Czech Republic (3), as shown in the Table 1 above, the structure of Czechia’s electricity installed generation capacity from 2015 to 2024 shows a gradual shift in composition. Thermal capacity is the largest share (41% of total installed capacity) in 2024 at 9.45 GW, though it has slowly declined over the decade. Nuclear capacity has been stable at 4.29 GW, while the most significant growth has occurred in solar capacity, which nearly doubled from 2.1 GW to almost 4 GW, becoming the fastest-expanding renewable source. Overall, the system has been moving away from coal-heavy thermal generation toward greater solar integration while maintaining stable level of nuclear capacity.

Table 2

Evolution of gross electricity generation in GWh in Czechia from 2015 to 2024 (Source: Yearly report on the operation of the Czech electricity grid for 2024)

(7)

Czechia’s gross electricity generation from 2015 to 2024 (see Table 2) also shows a transition from coal towards a more diversified mix. Lignite, formerly the dominant source, has dropped significantly, from 35.9 TWh in 2015 to 27.9 TWh in 2024, while hard coal declined even more steeply. Nuclear generation has remained stable over the period, at around 29–30 TWh, consistently providing the country’s largest single share of electricity. Renewable generation has steadily expanded, rising from 9.4 TWh in 2015 to 12.35 TWh in 2024, increasing its share of total generation from 11.1% to 16.7%. This growth is driven mainly by biomass, biogas and, especially, solar, which more than doubled over the period. Gas-fired generation varies from year to year but trends upward overall, reflecting a gradual shift toward more flexible, lower-carbon capacity. In sum, the decade is marked by declining coal use, stable nuclear output, and steady renewable growth, with solar emerging as the most dynamic renewable contributor.

Figure 1

Electricity production and consumption in Czechia from 2019 to 2024 (Source: Czech authorities)

(8)

Data for 2019 to 2024 (see Figure 1) shows a declining trend in both electricity generation and consumption in Czechia. The drop in gross and net generation from over 80 TWh in 2019 to the mid-70 TWh range by 2024 aligns with the gradual phase-down of coal capacity, rising carbon prices under the EU ETS, and an increasing share of renewables, reducing the need for conventional baseload generation. At the same time, domestic consumption is also on a downward trend, reflecting improved energy efficiency, electrification plateauing in some sectors, a shift in industrial output, and the economic slowdown during and after the COVID-19 pandemic. The narrowing gap between generation and consumption points to a reduced export surplus and growing reliance on cross-border balancing.

Figure 2

Export and import of electricity in the Czech Republic in 2020–2024 (Source: Czech authorities)

(9)

Czechia’s electricity trade balance from 2020 to 2024 shows a weakening of its net-export position, with exports peaking in 2022 and then declining, while imports gradually rise, narrowing the surplus each year. Although Czechia has long been a net exporter to Central and Eastern Europe - importing on average one-quarter of the electricity it consumes while exporting roughly one-third of what it produces - the most recent National Adequacy Assessment (“MAF CZ 2023”) indicates that this role will shift after 2025. Overall, Czechia is expected to develop into a net importer of electricity after the phasing out of lignite and coal and in view of the increase of demand resulting from electrification.

2.2. Expected capacity gap

(10)

The Czech transmission system operator (“TSO”) ČEPS, has carried out a resource adequacy and security of supply assessment that provides the basis for evaluating future capacity needs and system reliability. The most recent published assessment is the MAF CZ 2023 (4). According to Czechia, the reports support the inclusion of the Project within the Czech electricity system.

(11)

MAF CZ 2023 assessed two scenarios: the so-called respondent scenario and the so-called progressive one. Both assume the commissioning of two new units in the Dukovany site in 2036 and 2038. In the respondent scenario, coal sources gradually become unprofitable by 2030, after which coal remains in use only in smaller heating plants and industrial energy facilities. Natural gas or biomass replace coal, while the installed capacity of solar, wind and other RES grow. According to this scenario, the Czech Republic will still export electricity in 2025, but imports will gradually increase thereafter, peaking at 18.2% of consumption, i.e. at around 14 TWh, in 2035, before declining slightly. Resource adequacy is maintained until 2030, however the Loss of Load Expectation (“LOLE”) (5) reaches 10.3 hours in 2035. Although LOLE falls to 7 hours in 2040 due to the full operation of new nuclear units, it still exceeds the reliability standard of 6.7 hours/year.

(12)

The progressive scenario envisages a faster transition away from coal, including a complete coal phase-out by the end of 2030 and the conversion of heating plants and industrial energy facilities to natural gas. It also assumes a higher installed RES capacity – primarily solar and wind – a more extensive electrification of transport and heating, and a growing number of prosumers (6). In this scenario, a resource adequacy issue arises after 2035, with LOLE reaching 8.7 hours in 2035 and 13.7 hours in 2040. As in the respondent scenario, the Czech Republic is projected to become a net importer of electricity in 2025. Imports exceed 15 TWh after 2030, and in both 2030 and 2035 their share in total electricity consumption exceeds 20%. In 2040, despite new nuclear units, the imports volumes remain more than double those expected in the respondent scenario.

(13)

Czechia concludes that, from 2035 onwards, the projected values of the LOLE and the Expected Energy Not Served (”EENS”) (7) in both scenarios indicate resource adequacy concerns, as the reliability standard is not expected to be met, even when higher import volumes are considered. Czechia explains that many factors influence projected LOLE and EENS values, but the largest impact comes from the coal phase-out combined with rising electricity consumption and limited availability of imports (8).

(14)

Under normal climatic conditions, the need for additional resources is projected to peak in 2035 at 1.6 to 1.9 GW. This value is expected to decrease in 2040 due to the commissioning of new nuclear units, especially in the respondent scenario, where electricity consumption grows more slowly, and the required supply margin is smaller.

(15)

The Czech authorities explained that the decision to invest in new nuclear capacities was based on the results of the 2019 national adequacy assessment (9), which were a key element in identifying the need for new nuclear investments. This conclusion is consistent with the findings of the subsequent resource adequacy assessment of ČEPS. In the view of the Czech authorities, the expected capacity gap underscores the urgent need for additional dispatchable capacity to ensure the safe operation of the Czech electricity system. According to the Czech authorities, with today’s technological possibilities, Czechia has no viable alternative to nuclear power. Other sources/measures - renewables, gas power plants, flexibility resources, enhanced interconnections – are expected to complement nuclear capacities, but cannot replace the nuclear generation required to address the projected supply gap (see also Section 2.3). Nuclear power, being dispatchable, low-carbon and characterised by high availability and a high capacity factor, is viewed by Czechia as essential for closing the identified supply gap. Because nuclear development requires long lead times, the Czech authorities are examining alternatives as short-term measures, including further RES development, cogeneration upgrades, and the development of a capacity remuneration mechanism to facilitate the necessary investments in gas-fired generation and flexibility solutions, including battery storage during the transition away from lignite and coal.

(16)

The studies presented by the Czech authorities take into account the expected cross-border flows between Czechia and its neighbouring countries. The day-ahead electricity market is based on the implicit allocation of cross-border capacity. In June 2022, the Core (10) Flow-Based Market Coupling project (11) went live and Czechia fully integrated its day-ahead market, thereby achieving the target model of the electricity market as defined in Commission Regulation (EU) 2015/1222 of 24 July 2015 on capacity allocation and congestion management (12). Czechia also integrated its intraday market in line with the latest developments in the Core region.

(17)

Czechia maintains a highly interconnected electricity transmission system with its neighbouring countries (13). Czechia’s interconnectivity level is already close to 30%, reflecting a high degree of integration with the wider European grid. The Czech Republic has also planned and is implementing a series of measures (14) to reinforce and modernise its electricity transmission network. These initiatives, led principally by ČEPS, address key priorities for security of supply, the integration of RES, enhanced cross-border capacity, and resilience to future system needs.

(18)

Despite Czechia’s strong interconnection with surrounding countries, electricity flows vary considerably over the year. The analysis of the price evolution in both scenarios in MAF CZ 2023 shows that electricity imports can help lower wholesale prices in the Czech Republic during summer. However, during winter, all available resources in Europe are expected to be exhausted in certain hours, leading to electricity shortages, even when expensive demand side response measures are used. Therefore, MAF CZ 2023 concludes that new flexible generation resources are needed to prevent a possible supply shortage during climate-sensitive periods of the year, alongside continued improvements in energy efficiency.

(19)

Czechia explains that these conclusions are also supported by the 2024 edition of the European Resource Adequacy Assessment (‘ERAA’) (15), which identifies medium-term adequacy risks for Czechia. According to this assessment, in 2028, the Czech Republic would record one of the highest LOLE values in continental Europe, with LOLE values above the reliability standard in all modelled years.

2.3. Alternative options for securing a low carbon electricity mix

(20)

The Czech authorities have examined several options for securing a low-carbon energy mix, namely investments in RES, gas power generation, increased imports, demand response, and nuclear power. Extending the operation of gas, lignite, and coal resources was excluded for environmental reasons, as well as regulatory uncertainties and high CO2 prices.

(21)

According to Czechia’s National Energy and Climate Plan (16) (NECP), the share of RES in gross final consumption is expected to increase to 30% by 2030 (17). The NECP also envisages an installed capacity of 10.1 GW of photovoltaic and 1.5 GW of wind power plants (18). Czechia is arguing that given the increasing use of intermittent renewables and the specific climate constraints on RES production in the Czech Republic, deficits in electricity and heat supply are expected to increase significantly at times of high demand. Czechia will therefore require energy resources that are permanently available throughout the year, can be stored for both long and short durations, and are cost-competitive. Czechia considers that nuclear resources have lower requirements for support services and network investments compared to intermittent RES. In the context of emission reductions, they may also reduce the need for large-scale gas supply for ancillary services in a system with a high share of intermittent sources (19).

(22)

As regards demand response, in June 2025, the government approved the National Action Plan for Flexibility Development (20). This action plan envisages ensuring sufficient storage capacity to meet market needs and develops financing options. The action plan proposes steps to further develop demand side response, in particular the timely implementation of relevant EU legislation. Current estimates for battery development in Czechia in 2030 are of around 3-3,5 GW and in 2040 around 5 GW.

(23)

According to the estimations provided by Czechia, gas-fired generation is expected to reach 15% of gross electricity production by 2030 and 3% by 2040 (21). The Czech authorities stress that Czechia is fully dependent on natural gas imports, with limited diversification options due to gas network constraints. Gas-fired generation offers limited added value in terms of self-sufficiency and cannot fully replace the capacity lost through the coal phase-out. By contrast, nuclear fuel imported from abroad can be stored several years ahead. Thus, although not an indigenous source, nuclear power is considered a better option than natural gas in terms of energy security and import dependency (22).

(24)

The Czech Republic aims to maintain import and export capacities of the transmission system for 2030 of no less than 30% and 35% of maximum load, respectively, corresponding to a 15% target of installed capacity under the Czech NECP (23). However, coal-fired power plants and the existing Dukovany nuclear reactors, scheduled for shut down, currently account for approximately 55 % of domestic electricity consumption. According to grid modelling, it is technically possible to import approximately 20 TWh - around 25-30 % of Czechia’s net electricity consumption - which would not be sufficient to replace the capacity lost due to the decommissioning. In addition, the coal phase out in neighbouring countries is likely to further limit the availability of imports (see also recital (13) and footnote 8).

(25)

In light of the above, Czechia has examined the development of strategic nuclear capacity. It argues that due to geographical specificities and difficulty of developing large-scale renewable projects in Czechia, nuclear capacity has emerged as a preferred option for the Czech authorities. Its long lifespan, low CO2 emissions, high utilisation factor, high fuel density, and stable, reliable, and predictable operation are regarded as major advantages. The development of nuclear energy has been identified as a strategic objective, complementing Czechia’s other goals related to energy security and sustainability, such as increasing the share of RES and phasing out of coal power plants.

2.4. Alternative options to support nuclear energy

(26)

Czechia explained that the Low-carbon Act (”LCA”) (24), adopted on 1 October 2021, establishes the national framework for the construction and post-2030 operation of nuclear power plants above 100 MW, including the present Project.

(27)

Prior to adopting this framework, the Czech authorities assessed several potential support mechanisms for nuclear investment, ranging from tax credits and capacity mechanisms to direct subsidies, low-interest loans, regulated investment price models, Contracts for Difference (CfDs), and power purchase agreements (PPAs).

(28)

The authorities concluded that tax reliefs were unsuitable due to their significant budgetary impact and their inability to provide long-term investment certainty in volatile market conditions. Capacity mechanisms were also deemed inappropriate, as they remunerate availability rather than stable low-carbon generation. Direct investment aid and public loans were viewed as strong incentives capable of reducing financing costs, particularly in light of past investment cancellations due to insufficient revenue certainty. A regulated asset base (“RAB”) model was also considered, as it would reduce investment risk by allowing cost recovery throughout the asset’s life. However, the authorities noted that selling electricity directly on the market under this model could reinforce the position of the incumbent operator and raise competition concerns unless specific safeguards were introduced.

(29)

The Czech authorities also examined the option of a long-term power purchase agreement (“PPA”) between the State and the investor, under which a State-owned entity would buy the nuclear power plant’s (”NPP”) output at a predetermined price and resell it on the market. Such a mechanism would have provided revenue stability, facilitated the provisioning of decommissioning costs, and reduced investor risk, with financing potentially covered by the State budget or partly passed on to consumers. While a PPA could, in principle, mitigate market impacts and enable excess profits to be channelled back to the State, this option was ultimately discarded as, in light of the requirements in art. 19d(2) of the Electricity Regulation (25), direct price support for new investments must be granted through two-way Contracts for Difference.

2.5. Objectives and background

(30)

Czechia submits that the addition of two new nuclear units is essential to advance decarbonization goals, address the expected capacity gap and ensure security of supply, as well as to diversify energy sources, and preserve industrial competitiveness.

(31)

Czechia stresses the need to replace both coal-fired plants and, over the longer term, aging nuclear facilities. The four existing Dukovany units are expected to shut down between 2045–2047, and the two Temelín units between 2060–2062, while coal plants that currently supply almost half of domestic electricity are being phased out. In the latest NECP, Czechia reaffirmed its commitment to decarbonise its electricity system and phase out the use of coal for energy and heat generation by 2033. Czechia explains that, without new measures, domestic and regional assessments project a future shortfall in generation capacity. The notified measure therefore aims to enable the construction of two new nuclear units, Dukovany 5 and Dukovany 6, providing around 2 GW of capacity required to replace retiring assets, meet rising electricity demand, and ensure long-term security of supply and system reliability.

(32)

Czechia explains that the Project aligns with its National Energy Policy (26), the National Energy and Climate Plan, and the National Action Plan for the Development of Nuclear Energy (27), all of which emphasise the continued role of nuclear power in achieving climate neutrality by 2050. Both nuclear and renewable energy expansion are considered necessary to replace fossil fuels, diversify the energy mix, support industrial competitiveness, and create jobs.

(33)

Czechia notes that the Project forms part of a broader programme to expand low-carbon generation, necessary to replace approximately 10 GW of coal-fired capacity that currently produces almost half of Czechia’s electricity and is planned for decommissioning. This wider programme is expected to include additional nuclear capacity beyond the present Project. Together, the project and the broader programme will contribute to achieving a carbon-neutral economy by 2050 through the development of low-carbon electricity generation in Czechia.

(34)

Czechia submits that the Project contributes to Czechia’s commitments under the Paris Agreement, the European Green Deal, and REPowerEU, by reducing emissions and lowering dependence on imported fossil fuels exposed to price and geopolitical risks.

(35)

According to Czechia, its National Energy Policy explicitly provides for the continued use and development of nuclear power as a core component of its generation mix, a choice which is protected under Article 194(2) TFEU, which guarantees the sovereign right of each Member State to determine its own energy mix and the structure of its energy supply.

(36)

The LCA establishes the legal framework for developing and financing low-carbon electricity generation in Czechia, with a particular focus on new nuclear power capacity. It sets out the state’s role in supporting strategic low-carbon projects, including mechanisms for providing financial assistance, ensuring long-term price stability, and mitigating investment risks that private investors cannot manage alone. The Act also defines what qualifies as low-carbon electricity - explicitly including nuclear power - and outlines procedures for approving, constructing, and operating such projects. Overall, it provides the regulatory foundation needed to enable large-scale low-carbon investments essential for Czechia’s long-term energy security and decarbonisation objectives.

(37)

According to Czechia, a set of structural market failures prevents the development of new nuclear capacity without state intervention. Czechia argues that nuclear projects face exceptionally high upfront capital requirements - amounting to several billion euro - and are vulnerable to cost overruns and delays, particularly for first-of-a-kind Generation III units in OECD countries. In Czechia’s view, the very long operational lifetime of nuclear plants (around 60 years) creates exposure to prolonged market uncertainty that private investors and commercial lenders cannot accommodate. Czechia also notes that nuclear energy remains subject to political and societal sensitivities, increasing the perceived risk of future policy changes over the lifespan of the investment.

(38)

Czechia further considers that recent economic and energy market developments have intensified these risks. Inflation, higher interest rates, supply-chain disruptions, and geopolitical instability following Russia’s invasion of Ukraine have raised financing costs and undermined investment certainty. At the same time, Czechia highlights that increasing price volatility, driven by the expansion of zero-marginal-cost renewables and variable gas prices, makes future market revenues unpredictable. In Czechia’s assessment, this volatility hampers investors’ ability to secure long-term hedging arrangements at prices sufficient to ensure a viable return. Additionally, international experience of cost escalation and delays in new nuclear projects is viewed as having weakened investor confidence, further increasing perceived project risks.

(39)

Czechia concludes that these combined factors are likely to result in market revenues insufficient to ensure the economic viability of Dukovany 5 and 6 new units, creating a funding gap that the private sector cannot bridge. For these reasons, Czechia maintains that State aid is necessary to address the identified market failures and unmanageable investor risks, and to enable the construction of new nuclear capacity essential for meeting its decarbonisation and energy security objectives.

3. DESCRIPTION OF THE PROJECT

3.1. General description of the Project

(40)

The notified measures cover the construction and operation of two new nuclear units, i.e. units 5 and 6 at the Dukovany site, in Czechia, with a capacity of up to 976 MWe each.

(41)

Dukovany units 5 and 6 are planned to use KHNP’s APR-1000, a Generation III+ pressurised water reactor adapted to meet European nuclear safety regulations. The Project will provide up to 15,4 TWh of electricity per year.

(42)

Czechia explained that the new reactors will be able to operate in load-following mode, meeting the tender’s minimum requirements (see section 3.3) and carrying a contractual performance guarantee. They will comply with the European Utility Requirements for LWR Nuclear Power Plants (28) and will have the ability to run continuously anywhere between the minimum regulated level and full rated power. The minimum regulated level will be set out in the connection agreements by the TSO. Czechia further explains that, while the reactors will be technically capable of frequent loan changes, such operation will bring uncertainties and potential downsides such as greater material stress, added operational complexity, reduced fuel efficiency, and increased maintenance.

(43)

Construction works are expected to start in 2029 and the new-built nuclear reactors are expected to be commissioned as from 2036 (Dukovany 5) and as from 2037 (Dukovany 6) and have a lifetime of 60 years.

(44)

Korea Hydro & Nuclear Power, as the Engineering, Procurement and Construction (EPC) supplier, will be responsible for the engineering, construction and commissioning of the Project. Additional suppliers, providing goods and services outside the EPC scope, and contracting directly with the beneficiary, will also contribute, supporting the Project both during pre-construction development and through to the operational phase.

(45)

The Czech authorities also explained that the Project will meet the technical screening criteria in connection with radioactive waste management set out in point 4.27 of the delegated act adopted pursuant to the Taxonomy Regulation (29).

(46)

In particular, the National Policy for the Management of Radioactive Waste and Spent Nuclear Fuel (the “National Policy”) has been updated in view of complying with the technical screening criteria set out in points 4.26, 4.27 and 4.28 of the above-mentioned delegated act. The updated draft was submitted to the Government in April 2025 and the Government took note of it by its Resolution No. 249/2025 (30). Czechia explains that a key component of the updated National Policy is a detailed technical and implementation plan for commissioning a deep geological repository for high-level radioactive waste by 2050. This plan outlines the timeline, responsibilities, and major milestones for site selection, licensing, construction, and commissioning of the facility.

(47)

The updated National Policy is expected to undergo a screening procedure in 2026, following which it will be determined whether a Strategic Environmental Assessment (SEA) (31) will be required (the competent authority being the Ministry of the Environment). Once these procedures are completed, the Government will formally approve the updated Policy. Subsequently, in accordance with Article 13.1 of Council Directive 2011/70/Euratom, the Policy will be notified to the European Commission.

(48)

Czechia further explained that, concerning the use of accident-tolerant fuel, during the negotiation of the contract for the supply of nuclear fuel for the first ten years of operation of the plant, all accident-tolerant fuel features and technologies currently available from the selected supplier were considered. The fuel will be delivered in the horizon of 2035 and fuel development, and licensing will be performed in the years before delivery.

(49)

In addition, the Czech authorities explain that, in compliance with the Taxonomy Regulation, they intend to ensure that there will be resources available at the end of the estimated useful life of the nuclear power plant corresponding to the estimated cost of radioactive waste management and decommissioning. In particular, the Czech Republic has established an effective legal and institutional framework to ensure availability of resources for decommissioning, waste and spent fuel management. This framework has been for many years used for the existing units at Dukovany NPP and Temelín NPP. The framework has been subject to repeated evaluation and auditing from many international organisations and institutions. Decommissioning and nuclear waste treatment costs in have also been included in the financial model of the Project (see section 3.4.2).

3.2. Current state of development and planning of the Project

(50)

The Czech authorities have explained that the life-cycle of the Project is divided in five stages:

—	Stages 1: Preparation and supplier selection

—	Stage 2: Preliminary works

—	Stage 3: Construction

—	Stage 4: Warranty period

—	Stage 5: Operations post-warranty and decommissioning

(51)

In view of the need for new nuclear capacity, ČEZ approved an initial business plan in 2010 for adding up to 1 200 MW capacity to the Dukovany site by 2036. A feasibility study for the expansion of the current nuclear capabilities at the Dukovany site was completed in the same year. In view of the approval of State aid for the 5th unit in the Dukovany site, an initial business plan prepared by ČEZ was submitted to the Commission in June 2021 and an updated version was provided on 25 October 2023. A new draft business plan, taking into account the envisaged construction of two new units, was submitted to the Commission on 25 September 2025.

(52)

The Czech authorities explained that a First Implementing Contract concluded between Czechia, ČEZ and EDU II regulated stage 1 of the Project, i.e. until selection of the EPC contractor. EDU II is the Project’s promoter, responsible for the oversight of the Project and the future owner and operator of the new nuclear units. EDU II is owned by the State (80%) and by the Czech electricity incumbent ČEZ (20%) (for more information see section see section 3.9).

(53)

For stages 2 and 3, the contractual setup will include the Contract for Difference an Investor Agreement and a decision of the State to provide the Repayable Financial Assistance (‘RFA’), i.e. the loan (see section 5.2).

(54)

The Czech authorities submitted that most necessary permits and licenses have been obtained for the two units. More precisely, EDU II has obtained the following administrative decisions/permits.

(55)

The Project received its binding Environmental Impact Assessment (‘EIA’) approval in August 2019 (32), following a multi-year process which began in 2016 with a notice of intent launching the EIA scoping phase, supported by extensive technical and environmental surveys. The process included national and cross-border public hearings conducted in 2018. Based on this documentation and public input, the Ministry of Environment issued a positive binding EIA statement setting environmental and other conditions and allowing the Project to proceed to further permitting steps.

(56)

In March 2020, ČEZ and EDU II submitted an application for a siting license to the State Office for Nuclear Safety (‘SÚJB’). In March 2021, SÚJB completed the review and issued the sitting license for two new nuclear units at the Dukovany site, which is regulatory approval of the location of the nuclear facility, confirming that the proposed site is suitable and safe for a nuclear power plant, a precondition for later licenses, in particular for construction.

(57)

In April 2021, in line with the Energy Act, the Ministry of Industry and Trade assessed whether the contemplated Project complies with the State Energy Policy and issued an authorisation for two new nuclear units at the Dukovany site.

(58)

In February 2025, the Ministry of Industry and Trade issued a final zoning decision for the construction of new nuclear units at the Dukovany site and their connection to transport infrastructure.

(59)

EDU II has reached an agreement with the Czech Transmission System Operator, ČEPS on how the new Dukovany units would be connected to the national grid. A formal contract for future grid connection has been signed, setting target dates for the first synchronization (i.e. when each reactor begins supplying electricity) for Unit 5 in December 2036 and Unit 6 in December 2037.

(60)

The next steps, i.e. license for the construction of a nuclear installation and building permit, are expected to be concluded in June 2028 and March 2029 respectively, while the construction works will start separately for each unit, by April 2030 for Dukovany 5 and April 2031 for Dukovany 6.

3.3. The procurement process

(61)

Czechia explains that it implemented the process for the selection of the engineering, procurement and construction contract for the new nuclear power plant at the Dukovany site, without direct application of public procurement rules, on the basis of the security exclusion under Article 24(2) of Directive 2014/25/EU (33) (‘Utilities Directive’).

Definition of essential security interests entailed by the nuclear project

(62)

Czechia submits that the Project and the tender for the selection of the EPC contractor concerns its genuine essential security interests.

(63)

Czechia explains that its Security Information Service regularly highlights risks associated with major projects in the energy sector, particularly concerning foreign entities (34) whose policy goals conflict with Czech interests.

(64)

Czechia explains that the risks associated with nuclear projects fall under geopolitical security according to a 2019 study by the European Centre of Excellence for Countering Hybrid Threats (35). Nuclear projects can potentially be exploited for intelligence activities or geopolitical leverage. Hybrid threats are evolving, posing risks to the energy security of nations, necessitating stringent security measures. As a landlocked country dependent on energy imports, especially with planned coal phase-out in line with decarbonization goals, ensuring the security of energy supplies is crucial for the Czech Republic's national security and energy independence.

(65)

Given these concerns, the Czech Republic prioritises, in nuclear energy projects, an ongoing review of national security interests throughout the supplier selection process, rather than merely excluding certain suppliers at the outset based on security grounds.

(66)

Czechia explains that it established comprehensive procedures to address and manage the security risks associated with nuclear power plant construction. The Standing Committee on the Construction of New Nuclear Sources (36) adopted these procedures, which respond to identified associated risks and the need to define the national security interests in the context of nuclear newbuild projects.

(67)

The Standing Working Group (37) on matters relating to the security interests of the Czech Republic in the field of nuclear energy was also established to continually evaluate these security interests, ensuring that national security remains safeguarded during all phases of nuclear plant development, from preparation and construction to operation. The Standing Working Group identified various security risks and threats to national security interests, including geopolitical shifts and potential project delays, energy supply insufficiencies, cyber threats, and interventions by countries of origin that could affect project viability. Transparency issues were also identified as a significant concern. Based on these findings, the Czech Ministry of Industry and Trade developed specific security requirements, adopted as classified information by Government Resolution 484/V of 2020. These requirements emphasized risks like technological dependency, information misuse, and corrupt practices in the supplier chain during construction and operation phases on new nuclear sources.

Availability of less restrictive measures

(68)

Czechia has pointed out that the Utilities Directive and its Public Procurement Act (38) are not entirely suitable to the context at hand and therefore do not fully address the specific circumstances relevant to safeguarding essential security interests in this tender processes. According to Czechia, the Directive offers for instance limited scope for implementing restrictive criteria or requirements.

(69)

In that regard, Czechia underlines that under the Utilities Directive the selection criteria should be designed to reflect capacity of an economic operator to perform the contract with sufficient economic resources and professional and technical experience. Such criteria shall be objective and must, by their nature, lead to the characteristics that the economic operator has at the beginning of the tender procedure. However, in view of the dynamics of the geopolitical situation and increasingly sophisticated cyberattacks, it is not possible to pre-define selection criteria as regards which economic operators and/or their subcontractors are permitted to participate in a contract award procedure from the perspective of the protection of essential security interests. The contracting entity must assess the interested economic operators - under the guidance of the Government - individually and throughout the entire tender procedure to protect the essential security interests. Moreover, where access to the tender is restricted to certain economic operators, the applicable rules require transparent justification, the disclosure of which may in itself pose risks to national security.

(70)

Confidentiality within the tender process poses another critical concern in Czechia’s view. The Utilities Directive mandates unrestricted access to documents early in the tender process, conflicting with the need for gradual information dissemination crucial for safeguarding essential security interests. The Czech Republic argues that in such a highly sensitive procurement context, many of the conventional mechanisms used to safeguard confidentiality are inherently insufficient. Tools such as non-disclosure agreements (NDAs) can only prevent commercial misuse and cannot counter risks linked to state-driven interference or espionage and therefore fail to adequately protect against information misuse.

(71)

In summary, Czechia’s essential national security interests and the unique sensitivities of nuclear power plant projects necessitate an approach that cannot be accommodated within the constraints of the Utilities Directive. Czechia seeks the ability to control information dissemination and adjust tender procedures as necessary to protect security interests, requiring flexible provisions reflecting national specificities.

(72)

The Czech authorities consider that the choice to conduct a competitive tender procedure which incorporates all relevant security requirements is the least restrictive method possible for selecting the EPC contractor. In their view this approach maintains sufficient competitive pressure among the bidders, thereby constituting the least restrictive measure and entailing minimal necessary departures from standard public procurement rules. Therefore, the invoked derogation does not extend beyond what is strictly necessary to protect Czechia’s essential security interests.

The procurement process

(73)

Czechia submits that ČEZ and EDU II discussed the organisation of the tender to select the EPC contractor outside the Public Procurement Act regime with the national Office for the Protection of Competition and obtained a positive opinion on 15 June 2020 before proceeding with a call for tenders (39).

(74)

Czechia explained that the selected EPC supplier will be responsible for the engineering, construction and commissioning of the project.

(75)

Following the decision to exclude applicants from States that were not party to the Agreement on Government Procurement (40), at the time of launching the procurement process there were three possible technology choices: – AP1000 design by Westinghouse Electric Company LLC (USA); – APR1000+ design by Korea Hydro & Nuclear Power (‘KHNP’) (South Korea); and – EPR 1200 design by EDF (France).

(76)

The call for tenders for the selection of the EPC contractor was launched by ČEZ, via its subsidiary EDU II, on 17 March 2022, and initial bids by the three pre-selected suppliers were received in November of the same year. After extending the deadline for the submission of final bids twice, the three pre-selected potential suppliers provided updated bids on 31 October 2023 (41). Czechia explained that, under the terms of the tender process, the respective bids were required to include binding offers for the construction of the 5th unit in Dukovany and non-binding offers for 3 additional units, one at the Dukovany site and two at the Temelín site.

(77)

On 31 January 2024, the Czech Government decided (42) to modify the scope of the EPC tender by tasking EDU II to request binding offers for up to four nuclear reactors, with the aim to secure the option to proceed with the execution of these additional units at some point in the future, when and if the Czech State decides to do so.

(78)

On 6 February 2024, the Czech Government decided to continue the process of the tender with EDF and KHNP only, excluding Westinghouse.

(79)

On 30 April 2024, the two tenderers remaining in the selection process submitted supplemented bids including binding options for three additional nuclear units (43).

(80)

On 14 June 2024, CEZ/EDU II finalised the evaluation and ranking of the bids and recommended KHNP as preferred supplier to the Ministry of Industry and Trade (MIT). (44)

(81)

On 17 July 2024, the Czech Government confirmed KHNP as the preferred supplier/contractor for the construction of two new nuclear reactors at the Dukovany site (45).

(82)

On 7 May 2025, the Czech Government approved the conclusion of a turnkey EPC contract with KHNP for the two units at the Dukovany site.

(83)

The EPC contract between EDU II/CEZ and KHPN was signed on 4 June 2025 covering the construction of two new nuclear reactors at the Dukovany site and an option for two further units at the Temelín site. (46)

(84)

The Czech authorities submit that the EPC contract as well as a nuclear fuel and Contract Agreement were signed on 17 June 2025.

3.4. Revenues and costs of the Project

3.4.1. Risk-sharing

(85)

The Czech authorities explain that EDU II faces only limited risk exposure and that the allocation of risks between the investor and the State is structured to support efficient investment and minimise market distortions.

(86)

Construction risk is borne entirely by the State, given EDU II’s reduced equity contribution to the Project and the absence of obligations to inject additional capital if construction risks materialise. Market price risk is largely removed through the CfD mechanism (see section 5.3), while funding risk also lies mainly with the State as the provider of the RFA (see section 5.2). Performance and volume risks are mitigated through additional protection against adverse impacts (see section 5.4). Risks related to solvency, decommissioning, and waste management are shared between EDU II and the State (47). The risk of policy change is largely mitigated as ČEZ, EDU II’s private shareholder, benefits from a put option allowing it to sell its share to the State in specific circumstances (see section 5.4).

(87)

Czechia explains that, overall, this risk allocation brings the Project’s risk profile close to that of a regulated electricity infrastructure company, such as a network operator. In Czechia’s view, the limited exposure to construction, market, and funding risks, combined with the possibility of additional support makes the project markedly different from other nuclear investments or merchant energy projects.

3.4.2. Revenues and costs of the Project

(88)

Czechia submitted a financial model based on a discounted cash-flow analysis which forecasts future streams of cash flows, including the revenues and costs of the investment, and discounts them to determine the net present value (‘NPV’) of the Project. The financial model also determines the strike price of the two-way CfD, at a level where the NPV of the Project is zero, which allows the project to reach its target rate of return.

(89)

The financial model assumes a 9-years construction phase and a 60-years operational phase. Each reactor unit is expected to be operated for 60 years, but their operational phases will start from 2037 for Unit 5 and 2038 for Unit 6.

(90)

The financial model submitted by Czechia uses several assumptions regarding market price, the NPP’s availability, construction costs, operating costs and decommissioning costs and other relevant assumptions such as regarding capital expenditure and financing of the Project. EDU II will benefit from a two-way CfD with a duration of 40 years for each reactor (see section 5.3). Throughout the CfD period, the NPP will obtain market revenues by selling its output either on organised markets or through PPA auctions. The CfD will top or claw back these market revenues so that the plant effectively receives the Strike price per MWh of available capacity. After CfD expiry, the power plant will rely solely on market revenues.

(91)

In the baseline scenario, the strike price of the CfD is estimated to be [85-105] EUR/MWh (at 2024 prices).

(92)

Czechia explained that the financial model uses cost estimates which represent the best expectations for the NPP’s costs and operational characteristics at the notification.

(93)

The Czech authorities estimate the overnight costs of the Project at €[20-25] billion for both units 5 and 6. These costs cover the EPC contract, the Nuclear Fuel Contract (48), and Owner’s costs and contingencies (49). The EPC contract costs are EUR [15-20] billion overnight for both Unit 5 and Unit 6.

(94)

Czechia explained that the capital expenditure (”CAPEX”) of the Project, totalling EUR [3.0-5.0] billion in 2024 real terms (EUR [3.0-5.5] billion in nominal terms) in development CAPEX and EUR [15-20] billion in 2024 terms (EUR [20-25] million in nominal terms) in construction CAPEX (50) comprises several major cost components. Equipment accounts for the largest share at around 40%, followed by construction and commissioning costs at approximately 30%. Buildings represent about 10% of total CAPEX, while engineering services contribute roughly at the level of 15%. The remaining 5% consists of ancillary items such as staff training, technology transfer, and other project-related activities.

(95)

The operating expenditure (“OPEX”) of the Project, totalling EUR [90-110] billion ([35-45] EUR per MWh) is based on cost data for ČEZ’s existing nuclear units, adjusted to reflect the specific characteristics of the new units. Fixed operation and maintenance costs represent the largest share, at roughly [35-45]% of OPEX. Lifecycle costs account for around [15–25]%, while fuel costs constitute approximately [15–25]% of total OPEX. Contributions to the nuclear account make up about [5–15]%, and decommissioning expenses represent roughly [1–10]% of total OPEX. Load-following costs and consumable operating materials and equipment each contribute a further [1–10]% and [1–10]%, respectively.

(96)

Regarding the marginal costs of the NPP, Czechia sets out that they consist of the consumable operating materials and equipment ([1.2-2.7] EUR/MWh) and the contribution to nuclear account (51) ([2.3-5.3] EUR/MWh), provided in the financial model. The marginal costs are assumed to be approximately [3.0-6.5] EUR/MWh. Czechia considers that fuel costs estimated at [5-10] EUR/MWh may not be considered as purely marginal costs. The decommissioning costs have been estimated by [1.0-2.5] EUR/MWh.

(97)

The Czech authorities provided a sensitivity analysis for the Project, with 16 different scenarios.

(98)

For the commissioning delay sensitivities, the Czech authorities have maintained the total construction CAPEX amount and its allocation over time unchanged and extended the construction period by 1 to 5 years, with additional annual OPEX (based on base case) added for each of these extra years. However, Czechia will provide detailed outcomes of the commissioning delays scenarios at a later stage, including (i) whether additional CAPEX would arise as a result of the extended construction period (e.g. escalation or demobilisation/remobilisation costs), (ii) whether and how the existing CAPEX should be reallocated across the revised timeline, and (iii) whether the annual OPEX should be adjusted rather than replicated for each additional year. Early commissioning scenarios were not modelled at this stage.

(99)

For CAPEX sensitivities, total CAPEX has been uniformly increased or decreased by a given percentage. In the case of CAPEX increases, this leads to a higher RFA drawdown and, consequently, a higher strike price to ensure that the Project remains able to service its increased debt.

(100)

For the load factor sensitivities, the percentage load factor applied in the financial model has been reduced, resulting in lower revenues over the project life. These scenarios lead to a deficit in the post-CfD period, where the Project is no longer able to fully cover its operating costs. The Czech authorities will provide further details for this scenario.

(101)

As for electricity price variations, Czechia argues that they primarily affect revenues during the post-CfD period. Under current assumptions, the Czech authorities explain that the model can absorb lower post-CfD electricity prices, albeit with a corresponding reduction in the Project’s Return on Equity (RoE).

3.4.3. Cost overruns

(102)

The Czech authorities explain that the responsibility for cost overruns during the construction phase is defined primarily in the EPC contract.

(103)

In particular, the EPC contractor bears the main responsibility for delivering the Project on time, within budget, and at the required quality, with about […]% of the contract value covered by a fixed price. Certain risks outside KHNP’s control - and, according to Czechia, largely outside EDU II’s control as well - such as risks linked to licensing processes, changes in policy or regulation, or force majeure - are shared between EDU II and the Czech State as costs arising from these risks are to be financed through the state loan/RFA.

(104)

Regarding potential construction cost overruns, their coverage and incentives, the Czech authorities argue that since the state acquired an 80% share in EDU II in 2025, the Project is effectively state-owned (see recital (144)). The state therefore takes strategic decisions, controls EDU II, and appoints its management and supervisory bodies. They further note that (i) ČEZ a. s., the 20% minority shareholder, is itself 70% state-owned, and (ii) EDU II has no other economic activities. During construction, its sole source of financing is the RFA provided by the State under the Low-Carbon Act. As a result, Czechia maintains that any additional costs must ultimately be borne by the State, either through an increased RFA or via the State’s obligations as shareholder.

(105)

The State has chosen to cover additional costs by raising the RFA drawdown limit and adjusting the strike price of the contract for difference. In case of cost increases, EDU II will need to formally request an increase in the RFA and justify it in detail. Any increase will require approval from the Czech Government. At the same time, the authorities argue, the state will use its supervisory powers to ensure sound economic management.

3.5. Expected rate of return

(106)

The Czech authorities set the Project’s target RoE at [6-8]% to reflect the distribution of risks between the State and EDU II. The Czech authorities calculated a target RoE range of [5-7]% to [7-9]% and selected a [6-8]% RoE – at the lower end of this range – to minimise the required aid.

(107)

The Czech authorities provided a detailed explanation of the methodology used to calculate their target RoE range. Czechia states that this methodology is consistent with the Commission’s approach, particularly as applied in the 2024 Decision (52).

(108)

To estimate the RoE, the Czech authorities used a standard Capital Asset Pricing Model (“CAPM”) (53), expressed by the formula shown here below (54):

Where:

(a)	RfR is the risk-free rate, i.e., the return expected from investing in riskless assets;

(b)	MRP is the market risk premium; and

(c)	Beta (or levered beta) is a measure of the idiosyncratic, non-diversifiable risk of the Project. The formula is applied to compute a range of potential target RoEs under a low and high scenario as well as tests for sensitivities of different input values.

(109)

In their analysis, the Czech authorities estimated the RoE parameters as described below. While Czechia applied methodologies largely consistent with those used in the 2024 Decision, the beta coefficient was calculated using different data to reflect the Project’s updated risk profile, as further detailed below.

(110)

To calculate the RfR, the Czech authorities used 6- and 12-months averages of the Euro area triple A 30Y Government Bonds and German 30Y Government Bonds (55), resulting in a range 2.50–2.53%. The Czech authorities then added a Country Risk Premium (“CRP”) of 0.5% sourced from professor Damodaran’s database (56). The resulting RfR range is [3.00-4.00]%–[3.03-4.03]%.

(111)

For the Equity Risk Premium (“ERP”), the Czech authorities observed that, in its first Dukovany decision, the Commission determined the ERP using four sources: the Damodaran CDS-based method, the Damodaran rating-based method, and the median and average of Professor Fernandez survey-based approach (57). Applying the same methodology, Czechia calculated an overall ERP range of [4.5-5.0]% to [6.0-6.5]%.

(112)

To estimate the equity beta, or unlevered beta, Czechia relied on a peer group of four EU transmission system operators, arguing that the new investment model provides EDU II with a comparable level of risk protection and profit limitation (58). As noted in recitals (85) to (87), under the revised model, EDU II’s construction and development risks are mitigated, as cost overruns or delays can be passed through to the strike price during the CfD or through RFA increases post CfD, similar to how TSOs can recover such costs through tariffs. Moreover, under the CfD, EDU II faces limited volume and market risk, enabling it to achieve the target RoE in a manner akin to regulated entities. On the basis of this TSO peer data and using the same method applied in the Dukovany decision (59), Czechia derived an unlevered beta in the range of [0.25-0.35] to [0.30-0.40].

(113)

To estimate the levered beta, Czechia re-levered the equity beta using an expected average gearing of the Project of […]%, which is the same gearing used in the Dukovany 5 decision, obtaining a range of [0.70-0.80] to [0.75-0.85].

(114)

As for the tax rate, Czechia used 21%, which is Czechia corporate tax rate, and the same rate used in the Dukovany 5 Decision.

(115)

Table 3 below summarises the main parameters of Czechia’s target RoE, as well as Czechia’s RoE range.

Table 3

Czechia target RoE and target RoE range

Approach

Market-based approach

Survey-based approach

Risk Free Rate

[3.00-4.00]%

[3.03-4.03]%

Equity Risk Premium

[4.5-5]%

[6-6.5]%

Beta Unlevered

[0.25-0.35]

[0.30-0.40]

Gearing

[…]%

Tax rate

21.0%

Beta Levered

[0.70-0.80]

[0.75-0.85]

RoE

[5-7]%

[7-9]%

Source:

the Czech authorities

(116)

The Czech authorities also argue that the assessment further provides an expanded target RoE range of [5.5-6.5]%-[7.5-8.5]%, with potential further increases of the upper end, if a higher leverage is assumed.

3.6. Overcompensation control mechanism

(117)

The Czech authorities will establish an overcompensation control mechanism, applicable throughout the Project’s lifetime, intended to prevent excessive remuneration in scenarios where market conditions turn out to be more favourable than anticipated. They explain that the mechanism is intended to ensure that EDU II’s returns do not exceed an upper limit defined in the Project documentation and financial model. This cap covers potential excess returns arising from both lower-than-expected costs and higher-than-expected revenues, during and after the CfD period.

(118)

In addition, Czechia explains that the mechanism is designed to preserve continuous incentives for EDU II to operate the nuclear power plant efficiently within the NPP’s technical constraints.

(119)

The overcompensation mechanism is based on three key principles:

(120)

First, it relies on an ex-post assessment and, where needed, an adjustment of EDU II’s profitability to ensure that neither the Project nor its shareholders receive returns above the initially targeted profitability level (as defined by the target equity IRR).

(121)

Second, the mechanism is designed to be predictable ex ante. To that end, the trigger, review frequency, and corrective measures in case of overcompensation are all predetermined. The trigger is activated by comparing the Project’s actual equity IRR at the assessment date with the applicable target equity IRR Threshold. The actual equity IRR excludes any performance (or expected performance) of the Project beyond the assessment date.

(122)

Third, the mechanism incorporates a ‘motivation factor’ intended to maintain incentives for EDU II to behave in line with market principles and operate the plant so as to maximise market revenues within the NPP’s technical limits. In calculating the actual equity IRR, the target equity IRR is increased by [0.5-2.0] percentage point through this motivation factor. The Czech authorities note, however, that certain details of the mechanism are still under discussion.

(123)

The proposed implementation currently provides for the following sequence and timing of steps:

(124)

Five-year return-on-equity assessments: The review will be carried out at five-year intervals throughout the entire operational lifetime of the NPP. The State may conduct the review more frequently if considered necessary, for example after the expiry of the CfD period. The first assessment will take place at the end of the financial year in which the operating licence is obtained, or, if earlier, at the end of the financial year immediately preceding the fifth anniversary of the start of electricity delivery from the first new unit to the grid.

(125)

Use of the latest financial model: Each assessment will rely on the most recent version of the financial model, updated in accordance with the CfD as of the end of the financial year preceding the assessment date, and based on EDU II’s audited standalone financial statements for that year.

(126)

Payment or adjustment in case of overcompensation: if the actual equity IRR exceeds the target equity IRR (as increased by the motivation factor), EDU II must compensate the State. The State will determine whether the compensation is made via a lump-sum payment or an adjustment to certain parameters of the CfD formula going forward, so as to bring the actual equity IRR back to the target equity IRR threshold (increased by the motivation factor).

3.7. The national legal basis, transparency, and cumulation

(127)

The national legal basis for this measure is the LCA.

(128)

The Czech authorities explained that the aid will also be governed by Act No. 218/2000 Sb., Act on Budgetary Rules and Amendment of Some Relating Acts (60) (Budgetary Rules), as amended, as well as the various contracts and agreements with the beneficiary, as described below.

(129)

The Master Agreement on cooperation on the construction of a new nuclear sources in the Czech Republic signed between the Ministry, ČEZ and EDU II on 28 July 2020 established a general framework for the initiation and subsequent development of cooperation between the parties on the Project for the construction of new nuclear sources at the Dukovany site. It does not contain any legally binding obligations on the parties. The Project is made conditional in the Master Agreement on prior State aid approval.

(130)

The First Implementing Contract between the Ministry of Industry and Trade, ČEZ and EDU II contains legally binding arrangements concerning the rights and obligations of the parties for the first stage of the Project, i.e. until the selection of the EPC contractor. It was signed on 28 July 2020 and subsequently amended on 24 December 2022, 20 December 2023, 30 January 2024, 20 December 2024, 27 February 2025, and 30 April 2025. The First Implementing Contract sets out the conditions for CEZ’s equity contribution to EDU II which finances the first stage of the development of the Project.

(131)

On 2 October 2025, the Czech authorities provided copies of:

(a)	The draft term sheet on the CfD the between the State and EDU II, describing its main parameters. The CfD will replace, when signed, the First Implementing Contract.

(b)	The draft term sheet of the Repayable Financial Assistance (‘RFA’) to be granted by a decision of the Ministry of Industry and Trade.

(132)

The Czech authorities also provided the Shareholders’ Agreement between the Ministry of Finance and ČEZ which sets out the conditions for the transfer of EDU II’s shares from ČEZ to the State. The agreement also sets out the shareholders’ rights and obligations in relation to EDU II and establishes restrictions on the transfer of EDU II shares and related pre-emption rights and defines the obligations of the contracting parties in relation to EDU II’s governance rules.

(133)

The Czech authorities explained that the information on the Project will be published on the Ministry of Industry and Trade website https://www.mpo.cz/cz/energetika/.

(134)

The Czech authorities confirmed that the measure cannot be cumulated with other aid received to cover the same costs to be incurred under the Project.

3.8. Administration of the measure

(135)

Under article 4 of the LCA, the decision to grant the RFA lies with the Ministry of Industry and Trade, as the RFA is provided from the State budget within the Ministry’s budget (see recitals (162) and (176)). The funds provided to the beneficiary from the State budget must be received in accounts maintained by the Czech National Bank and subordinated to the State Treasury, in accordance with applicable budgetary rules. Repayments of the RFA principal constitute revenue of the State budget, under the Ministry’s budgetary chapter.

(136)

With respect to the CfD, OTE - the Czech electricity and gas market operator - will handle the administrative processing of payments to or from EDU II, as explained in further detail in recital (183).

(137)

For the ‘Additional Support’ mechanism, as further described in recitals (229)-(231), the granting authority differs depending on the period in which compensation is provided: during the CfD operational period, the Ministry of Industry and Trade will act as a granting authority, whereas, during the post-CfD period, the Ministry of Finance will assume this role.

3.9. The beneficiary

(138)

The direct beneficiary of the measure is EDU II, an entity specifically created to build and operate the new nuclear generation units at Dukovany. The Czech Republic currently holds an 80% majority stake in EDU II, while ČEZ, holds the remaining 20%. Established in 2015 as a ČEZ subsidiary, EDU II functions as a special-purpose entity. Under the shareholders’ agreement, ČEZ’s 20% stake may be transferred to the State through a State call option or a ČEZ put option.

(139)

ČEZ is the sole nuclear plant operator in Czechia. It is a publicly listed company on the Prague and Warsaw stock exchanges and the parent company of the ČEZ Group, which operates in several European countries (including Czechia, Germany, Poland, Slovakia, France, Italy, the Netherlands and Austria). The Group is primarily active in electricity generation, trading, distribution, and the sale of electricity and heat. It is also involved, to a lesser extent, in commodity trading, gas distribution and supply, mining, and energy services. The Czech Republic owns 69.78% of ČEZ, and the Ministry of Finance exercises the associated shareholder rights.

(140)

EDU II is the Project promoter, responsible for strategic control and oversight of the Project, and will be the owner and operator of the new nuclear units. It will also be responsible for dispatch decisions. EDU II will carry out all management functions under effective control and oversight by the State. The Project will be supervised by two boards and an executive leadership team with experience in both nuclear and conventional power plants.

(141)

According to the Czech authorities, the current Project model and the choice of EDU II as Project promoter result from a detailed Government assessment. However, this selection was not preceded by a tender, competitive procedure, or public call for expressions of interest.

(142)

Czechia explains that, initially, ČEZ was selected as the Project’s promoter (as 100% owner of EDU II) for the construction of Dukovany 5 unit due to its extensive experience as a credible and capable nuclear developer and operator in Czechia, and its familiarity with the relevant legislative and regulatory framework, including licensing procedures. As one of Europe’s ten largest energy companies, the ČEZ Group also has expertise in nuclear research, project planning, construction and maintenance of energy facilities, and the processing of energy by-products. Its highly qualified staff, experienced in nuclear energy, public procurement, and negotiations, was considered an asset for the Project.

(143)

The Czech authorities also noted that the availability of suitable sites for nuclear construction and the economic rationality of such development were important considerations. They described the preparatory work undertaken by ČEZ to date.

(144)

Czechia explains that, further to the extension of the Project’s scope from one to two nuclear reactors, the Czech Government acquired an 80% stake in EDU II from ČEZ, to ensure direct control, oversight and financing. This purchase was made to prevent ČEZ from becoming over-leveraged, which would have adversely affected its credit rating, hindering its access to adequate financing for its operations. According to Czechia, the 2025 purchase of EDU II shares by the State was based on Article 14 of the First Implementing Contract which regulated the initial stages of the Project (see recital (52)) and its conditions were set out in a Shareholder Agreement signed between ČEZ and the Czech State, represented by the Ministry of Finance.

(145)

The Czech authorities explain that, under that contract between the Czech State and ČEZ, the share acquisition obligation could be triggered if certain procedural steps were not completed by specific deadlines - particularly the signing and entry into force of key agreements essential for the Project’s economic viability, such as the Second Implementing Contract, the Power Purchase Agreement, or the Contract for Difference. As a result, Czechia maintains, based on the provisions of that contract, it was required to purchase the EDU II shares at a price corresponding to ČEZ’s nominal investment in EDU II (without any profit margin).

(146)

The Czech authorities state that, as of November 2025, ČEZ has invested CZK 4.5 billion in the development of the new nuclear power plant at the Dukovany site. On the basis of these invested funds, the Czech Republic and ČEZ agreed that ČEZ would sell an 80% stake in EDU II to the State for CZK 3.6 billion.

(147)

Czechia considers that the State’s purchase of an 80% stake in EDU II at the agreed transaction value does not – taken alone – provide an advantage to ČEZ as it was executed at cost, without allowing for any profit margin.

(148)

The Czech authorities further explain that, as originally envisaged in the contract, the transaction should have resulted in the sale of 100% of EDU II shares at the price per share agreed under the contract. While the price per share was respected, the parties agreed to reduce the proportion sold to 80%, with ČEZ retaining a 20% stake. Czechia explains that this retention was necessary to ensure ČEZ’s continued involvement in the two-unit NPP Project and to secure the technical expertise essential for its success. The sale therefore followed the revised 80/20 ownership structure.

(149)

Czechia considers that under the revised ownership structure, with ČEZ as a minority shareholder in EDU II, the benefits of cost and time efficiency remain, even though ČEZ is no longer the direct beneficiary. These efficiencies can only be achieved by selecting EDU II as the beneficiary. Choosing another operator would involve at least EUR [200-700] million in additional costs and significantly delay the Project. Directly appointing EDU II therefore enables Czechia to address its capacity needs more quickly and at a lower cost than would be possible through a competitive process. Moreover, the Czech authorities emphasised that only a limited number of sites in Czechia are suitable for large nuclear units.

(150)

The Czech authorities explained that EDU II is a separate legal entity with its own management and board. It will operate independently, both financially and operationally, and will be subject to regulatory oversight. According to Czechia, the company’s statutes establish governance arrangements ensuring its independence from ČEZ. Members of both the Board of Directors and the Supervisory Board are legally required to act solely in EDU II’s interests, not in the interests of its shareholders. Under the shareholders’ agreement, ČEZ may nominate only a minority of board members, while the Ministry of Finance appoints the majority.

4. MARKET STRUCTURE AND IMPACT OF THE PROJECT

(151)

Regarding the wholesale electricity market, the Czech authorities explain that electricity may be consumed by producers, supplied to end-users, or traded. Trading occurs either through bilateral contracts or on organized markets. The day-ahead and intraday markets are operated by OTE a.s. Electricity generated domestically is also traded on platforms run by other entities, such as the Power Exchange Central Europe a.s., as well as comparable foreign exchanges.

(152)

As for net electricity production, the ČEZ Group accounts for 71.5% of the market. The Sev.en EC Group represents 12.1%, EP Energy Group 2.1%, Sokolovská uhelná (the legal successor) 1.5%, and the Veolia Group 1.2%. All other producers together hold 11.6%. According to the Herfindahl-Hirschman Index (HHI), the generation market is highly concentrated (HHI above 1800).

(153)

The Czech electricity generation market is similarly characterised by high market concentration. In 2024, the ČEZ Group controlled 45.56% of dispatchable generation capacity, including net imports and 71.14% of total generation capacity. Czechia explains that ČEZ’s market share is projected to decline as thermal plants (especially coal and lignite capacity) are phased out and that the generation capacity incentivised by the aid package under discussion (the Project) will not significantly affect ČEZ’s power on the Czech electricity market. Specifically, ČEZ’s market share of dispatchable generation capacity is expected to drop to 26.25% in 2040 and to 12.67% in 2050, while the increase due to the Project will be of less than 5%. Similarly, ČEZ’s market share of total generation capacity is expected to drop to 41.48% in 2040 and 26.9% in 2050, while the increase in ČEZ’s market shares will be of less than 8%

(154)

The Czech authorities maintain that the measure will not reinforce the market position of ČEZ or EDU II, given the revised ownership structure. Since the Czech State now holds 80% of EDU II, the entity should be regarded as a new market participant. EDU II’s market share in Czechia will remain limited, as it will operate only the new nuclear units, and even smaller at the regional level. Furthermore, with EDU II as the beneficiary of the aid and ČEZ retaining only a 20% stake, the authorities argue that ČEZ’s market position will neither be strengthened nor preserved, in light of EDU II’s governance arrangements (see recital (150)) and trading strategy (see section 5.3.4).

5. DETAILED DESCRIPTION OF THE MEASURE

5.1. The aid package

(155)

Czechia argues that, in line with industry practice, the combination of high upfront costs, long payback horizon, and exposure to electricity price volatility makes public support indispensable to this Project.

(156)

The aid package will include the following three measures:

(a)	‘Measure 1’: State loan (the RFA), at a preferential rate. The current initial amount of RFA is estimated around EUR [23-30] billion (61)(see section 5.2).

(b)	‘Measure 2’: A two-way CfD, ensuring stable revenues for the NPP for a period of 40 years (see section 5.3).

(c)	‘Measure 3’: Protection for policy changes and additional protection against adverse impacts to address the risk arising with the longevity of exposure to policy changes (see section 5.4).

(157)

To finance the Project, the Czech Republic will rely on a mix of equity brought by the beneficiary and external financing (62).

(158)

In stage 1, the Project was funded by an equity contribution by ČEZ of 4.5 billion CZK. From this amount, EDU II paid for works related to the preparation of the new NPP. The Czech authorities recall that this contribution has already been made, and the equity has been retained by EDU II. ČEZ's responsibilities during the project's initial stage were defined in the First Implementing Contract, mandating the creation of conditions for constructing new nuclear units. Specifically, ČEZ was required to carry out several activities outlined in the contract, such as implementing procedures to select the EPC contractor, securing the site permit for the nuclear facility, obtaining planning approval, acquiring property rights, and performing other necessary actions to complete the project's first phase. Additionally, the contract stipulated that if the project does not proceed to the second stage, the State would reimburse ČEZ for the costs incurred in relation to the project.

(159)

No additional equity will be provided to EDU II in the future, neither by ČEZ nor by the Czech Republic.

(160)

The future financing of EDU II is expected to be loan-based. From Stage 2 (i.e. preliminary works, construction, and if necessary, post commissioning) onwards, the Project will be financed by commercial debt until the RFA is available in 2027, after the Commission approval of state aid notification has been obtained.

5.2. Measure 1: The subsidised State loan (RFA)

5.2.1. General principles

(161)

As a first measure, the Czech Republic intends to provide a state loan at a preferential rate, i.e. at the costs of State debt financing plus 1%, but not less than 2% per year, with no interest accruing during construction.

(162)

The drawdown of the loan is planned to be begin in 2026 or after, with a repayment period of 30 years and will be sourced from the State budget and repaid from the NPP’s revenues from selling electricity and from the CfD settlements.

(163)

Czechia explained that the loan will cover the full construction costs as currently estimated, as well as all potential cost overruns during the construction phase, regardless of who is responsible for such cost increases.

(164)

However, Czechia will apply to the RFA a maximum ceiling of EUR [30.0-37.5] billion in nominal terms for the worst-case scenario of construction cost overruns, which is approximately 53% higher than the estimated overnight costs of the Project of EUR [20-25] billion.

(165)

Czechia argues that the RFA amount will cover all necessary costs related to the Project and there will be no need for other sources of financing during construction. The amount contained in the RFA was set based on the predicted cost escalation and it includes relevant contingencies for the assessed risks which are probable to materialise during construction.

(166)

Although the precise amount of the RFA was not provided by the Czech authorities (63), they provided an estimation of the total amount of RFA. The amount consists for Project costs during Phase 2 and Phase 3 and additional contingency amount (the ‘Project Reserve’), to potentially cover Project cost overruns above expected costs.

(167)

Czechia argues that, as the RFA amount is a key parameter of the MIT decision to provide RFA to the Project, it cannot be increased without the government approval.

(168)

Czechia explained that the State, as 80% owner of the project company, will exercise its control over EDU II to ensure efficient performance and management of the Project. Consequently, the government will only approve increases in the RFA amount to the extent they are necessary and proportionate for an efficient realisation of the Project and continued operation of the plant.

5.2.2. RFA parameters

(169)

The RFA parameters were described by the Czech authorities as follow.

(170)

The RFA will be used to finance all future phases of the Project, i.e. Phase 2 (the second development stage/preliminary works), Phase 3 (the construction stage), Phase 3 (commissioning stage) and Phase 4 (trial operation stage). The amount will be set in nominal prices and therefore it includes the expected escalation of costs due to inflation.

(171)

The interest will be:

(a)	Until granting of the licence to operate the nuclear installation: zero interest.

(b)	After granting of the licence to operate the nuclear installation: costs of State debt financing plus 1% but not less than 2% per year.

(172)

The amortisation will be on a sculpted basis (64) over 30 years (65). The amortisation will start in partial extent with granting of the licence to operate the nuclear installation for the first unit. The amortisation in full extent starts with granting of the licence to operate the nuclear installation for the second unit.

(173)

Before first principal payments and interest debt service, a reserve solely for RFA amortisation and payment of interest (the ”Debt Service Reserve” (66)) will be created and kept by EDU II during the amortization period and used solely for RFA repayment and payment of interest in case of cash shortfall.

(174)

If not used during the amortisation period, the Debt Service Reserve shall be used up for the last instalments and interest payments.

(175)

If EDU-II notifies the State that the Project requires the suspension of RFA amortisation in order to prevent the Financial Default (67) and that EDU II has used up the Debt Service Reserve (“Suspension Notice”), RFA amortisation and payment of interest may be suspended for such period as required t

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CELEX	52026AS117794
Type	Avis institutionnel
Date	lundi 22 décembre 2025

Résumé IA

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