Warsaw revised key elements of financial package to address commission’s concerns
The European Commission has given its approval for Poland to finance its first commercial nuclear power station with public aid estimated at PLN 60 billion (€14.2bn, $16.5bn).
The commission said in a statement on 9 December that the nuclear station, which will have three Westinghouse AP1000 reactor units, is scheduled to start operating in the second half of the 2030s.
Poland’s energy minister Milosz Motyka told a press conference: “We can now freely begin the next investment steps.”
He said Warsaw is planning to apply for construction permit in 2027 with first concrete in 2028 and operation in 2036.
The project, in Poland’s northern province of Pomerania, plays a central role in Poland’s strategy to decarbonise electricity production, the commission said.
In September 2024, Poland notified the commission of its plan to support Polskie Elektrownie Jądrowe, (PEJ), a fully state-owned company, in the construction and operation of a new nuclear power plant in Lubiatowo-Kopalino.
The total capital expenditure for the project is estimated at around €42bn in nominal terms.
The approval will allow Poland to sign agreements with the construction consortium of Westinghouse and Bechtel Group Inc.
PEJ welcomed the decision, which Motyka said was made “in record time” of less than 12 months. It said the nuclear power station is the largest investment in the energy sector in Poland’s history.
PEJ president Marek Woszczyk said the approval was “a huge success” for Poland.
Polish prime minister Donald Tusk said the commission’s consent 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.
Poland’s Financing Plans
Poland plans to grant direct price support in the form of a two-way contract for difference (CfD) providing stable revenues to the nuclear plant for a period of 40 years. Under the CfD, the Polish state will pay PEJ if market prices fall below a strike price that will be determined according to a clear methodology reviewed by the commission. If market prices exceed this strike price, PEJ will pay the difference to the Polish state.
PEJ will also benefit from an equity injection covering approximately 30% of the costs of the project and of state guarantees covering 100% of the debt it takes on to finance the project.
The Commission’s Investigation
In December 2024, the commission opened a formal investigation into Poland's proposed support package for the nuclear power project. The investigation focused on the appropriateness and proportionality of the aid, potential distortions in electricity markets, and the measure’s compliance with EU law.
During the investigation, Poland revised key elements of the aid package to address the commission’s concerns.
Revisions included shortening the duration of CfD from 60 to 40 years and changing the renumeration formula to ensure strong incentives for PEJ to operate the plant efficiently and to make use of its abilities to respond to market signals.
The commission said the formula, where the power plant is remunerated for its availability to generate electricity rather than for its electricity output, helps limit distortions and avoids displacing renewable generation, supporting a more efficient and decarbonised electricity system.
To prevent overcompensation, Poland has introduced a 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 has agreed to strict conditions regarding electricity trading. At least 70% of the plant’s annual electricity output will be sold on the open power exchange throughout the lifetime of the facility. The remaining output may be sold via auctions.
Poland also committed to ensure that PEJ will be legally and functionally independent from other major operators in Poland's electricity market.
Westinghouse and Bechtel announced they were forming a consortium for the project in 2023. In April an engineering design agreement was signed with the consortium to secure the next stage of the project until a general engineering, procurement and construction (EPC) contract is signed.
In September PEJ applied to the Pomeranian authorities for a permit to carry out the second stage of preparatory works for the project.
Poland is planning to build three Westinghouse AP1000 plants at a site in the north of the country. Courtesy PEJ.
