The European Commission has cleared the upgrade of Hungary's Paks nuclear power plant to allow the partnership between Hungary and Russia's Rosatom to develop the site in 2018.
The EC concluded that Hungary's financial support for the construction of two new nuclear reactors in Paks (Paks II) involves state aid, and therefore approved the deal under EU state aid rules on the basis of commitments made by Hungary to limit distortions of competition.
Margrethe Vestager, commissioner in charge of competition, stated that "Hungary has decided to invest in the construction of the Paks II nuclear power plant, its right under the EU Treaties. The Commission's role is to ensure that the distortion of competition on the energy market as a result of the state support is limited to a minimum. During our investigation the Hungarian government has made substantial commitments, which has allowed the Commission to approve the investment under EU state aid rules."
Hungary aims to replace the four reactors currently operating at the Paks site, which were constructed in the 1980s and account for approximately 50 percent of Hungary's domestic electricity production. Hungary considers that the construction of Paks II is necessary to replace phased out generation capacity and to address the need for new capacity.
The EC stated that under the EU Treaties, Member States are free to determine their energy mix and have the choice to invest in nuclear technology. The Commission's role is to ensure that when public funds are used to support companies, this is done in line with EU state aid rules, which aim to preserve competition in the single market.