Following an almost two-year preliminary consultation round, and with a view to the importance and magnitude of the Paks nuclear plant’s capacity maintenance project, on 23 November 2015 the European Commission decided to carry out an in-depth examination of the competition law aspects of the investment, in order determine whether it includes state funding. With this decision the issue has arrived at a new, more open stage in the procedure, throughout which third parties can also give their opinions on the competition law aspects of the project.
In order to ensure that throughout the procedure the Government’s position is clear and understandable, the Prime Minister’s Office has decided to disclose to the public the independent economic analysis for the Paks II nuclear power project prepared by the internationally renowned Rothschild Group. The Government has also sent the results of the analysis to EU Commissioner for Competition Law Margrethe Vestager.
The analysis by the Rothschild Group thematically addresses all points of criticism of the project’s profitability previously published by third parties, which falsely suggested that the construction of the new nuclear power blocks is not economically viable. The Rothschild Group’s conclusion is exactly the opposite of these opinions: the Paks II investment is one which will bring favourable returns for Hungary. The analysis explains in detail that there is no need for state funding, as the project is also competitive and profitable under free market conditions.
The study also examined factors which influence potential changes in electricity prices in the market. Based on the results, the analysis states that a major increase in electricity prices is to be expected, which will result in market prices significantly higher than the cost price of the new blocks. The revenues of Paks II will therefore be sufficient to cover all costs – including those of capital, interest on capital, fuel, operation and maintenance, waste management and future decommissioning.
The analysis also reaffirms that the Paks II project’s implementation is in line with the objectives of a liberalised and connected common European energy market. The investment contributes to the improvement of security of supply, to the achievement of climate protection goals and to maintaining affordable energy prices without any guaranteed feed-in tariffs or other state subsidies.
Today, on the website of MVM Paks II Ltd., the Government of Hungary is disclosing to the public the full English version of the Rothschild Group’s analysis. The document is also available on kormany.hu.