Dukovany completion contract amended for a second time, expected state aid approval date adjusted

The Ministry of Industry and Trade has concluded a second amendment with ČEZ to the first implementing agreement for the completion of the Dukovany nuclear power plant. As with the first amendment to the contract, the deadline for European Commission approval of state aid has been adjusted. 

Just before the end of this year, the Ministry of Industry and Trade concluded a second amendment to the first implementing agreement on the completion of the Dukovany nuclear power plant. Together with the framework cooperation agreement for the construction of a new nuclear source in the Czech Republic, this agreement sets out the basic rights and obligations of the state, represented by the Ministry of Industry and Trade, and the partly state-owned company ČEZ in the construction of a new unit at Dukovany.

The sole main purpose of the second amendment was to adjust the date by which state aid for the new Dukovany unit must be approved at the latest. The specific deadline is not apparent from the contract, as it was redacted before publication in the contract register.

Although it cannot be ruled out that the deadline for state aid approval was moved to an earlier date, it is highly likely that the deadline was extended. This is also indicated by recent statements from Industry Minister Jozef Síkela, who told Hospodářské noviny that “although significant progress has been made in negotiations with the Commission, it appears that it will not manage to issue the decisions by the end of the year, as we had originally planned. They assure us it will be in January.”

Under the 2020 plan, state aid approval had already been expected in the fourth quarter of 2022. According to the latest statements by the Minister of Industry and Trade, it is now expected no earlier than the first quarter of 2024.

Support for new nuclear sources will also be possible through contracts for difference

Support for the new Dukovany unit has so far only been possible in the Czech system in the form of an offtake agreement, which is also envisaged by the state aid notification for the new Dukovany unit.

Following the latest amendment to the Act on measures for the Czech Republic's transition to low-carbon energy, support for the new unit may also be granted through an agreement on a balancing regime (i.e. a contract for difference). As follows from the explanatory memorandum to the amendment, the legislative change responds to the European Commission's preference for granting support in the form of a contract for difference.

It is not yet clear whether support for the new Dukovany unit will take the form of an offtake agreement, with a contract for difference used only for further planned units, or whether the contract-for-difference model will also be used for the first new unit at the Dukovany site. As the Ministry of Industry and Trade does not comment on notification-related questions, the final form will only become clear once the European Commission issues its decision.