Commission opens in-depth State aid investigation into Romanian support for Cernavodă nuclear refurbishment and lifetime extension
The decision to open the in-depth investigation in the Cernavodă case was published in the Official Journal today.
The case concerns Romanian State aid supporting the refurbishment and 30-year lifetime extension of Unit 1 of the Cernavodă nuclear power plant. The beneficiary of the aid is Nuclearelectrica National Company S.A. (SNN), and the aid package includes a 30-year two-way Contract for Difference (CfD), a EUR 600 million grant, State guarantees covering 80% of project loans and a protection against certain regulatory changes.
The Commission expressed doubts as to the appropriateness and proportionality of the aid package and its effects on competition and trade, as well as about the CfD’s compliance with Article 19d(2) of the Electricity Regulation.
In particular, the Commission’s main concerns relate to the design and duration of the 30-year two-way CfD, which it considers may excessively shield SNN from market risk and weaken efficient market incentives. The fact that the CfD is expected to operate predominantly in clawback mode, may also indicate that the EUR 600 million direct grant exceeds what is strictly necessary. The Commission further questioned whether 30 years of price support represents the minimum necessary and considered that the events allowing adjustments to the CfD strike price are defined too broadly, leaving excessive room for interpretation. Additional concerns relate to the proportionality of the State guarantees, the WACC methodology and financial model, the absence of sensitivity analysis, as well as the effectiveness of the proposed overcompensation control mechanisms.
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