EU Approves State Aid for Poland’s 1st Nuclear Power Plant

The European Union’s executive branch has approved a multibillion-euro state aid package for Poland’s first nuclear power plant.

The plant is expected to begin operating in the second half of the 2030s and will have an installed capacity of up to 3,750 megawatts, the European Commission (EC) said on Dec. 9.

Warsaw views the decision as crucial to launching the project at Lubiatowo-Kopalino on the Baltic coast.

“Nuclear energy will be a key component of Poland’s energy mix. Today we take a crucial step toward this goal,” Polish Energy Minister Milosz Motyka said in a Dec. 9 statement.

He added that the approval came “in record time,” noting the entire process moved “almost twice as fast as the last such decision in Europe.”

The war in Ukraine and efforts to cut greenhouse gas emissions by 2030 returned nuclear energy to the EU’s policy agenda.

That includes the creation of the European Nuclear Alliance in 2023 to promote nuclear power as part of the bloc’s climate strategy, along with calls from EU leaders for the region to produce more of its own nuclear energy.

The Dec. 9 decision comes amid a broader global nuclear revival, as countries seek to strengthen energy security, meet climate goals, and reduce reliance on fossil fuels.

In July, the UK approved the construction of Sizewell C nuclear power plant in eastern England, the UK’s second new nuclear plant in more than two decades.

In the United States, tech giants such as Microsoft, Amazon, and Google have signed long-term nuclear energy deals to power data centers.

Last year, Microsoft entered a 20-year power purchase agreement to reopen Pennsylvania’s closed Three Mile Island (TMI) nuclear power plant.

EC Investigation

The approval follows the commission’s investigation that opened in December 2024, three months after Poland proposed a support package for the nuclear power project.

Poland said it intended to support Polskie Elektrownie Jadrowe (PEJ), a fully state-owned company, to enable construction of three AP1000 nuclear reactors, each with a capacity of 1,250 megawatts.

Total capital expenditure for the project is estimated at 42 billion euros ($49.1 billion) in nominal terms.

The package includes an equity injection covering roughly 30 percent of project costs, state guarantees covering 100 percent of PEJ’s debt financing, and a 40-year two-way contract for difference (CfD).

Under the CfD, Poland will pay the operator when market power prices fall below a strike price set under a methodology reviewed by the EC, while PEJ will return excess revenue when market prices rise above the strike price.

The EC’s investigation reviewed whether the support was appropriate and proportionate. It also examined whether it risked distorting electricity markets and whether it complied with EU rules.

The EU reiterated that member states remain free to decide on their energy mix, including whether to use nuclear power. But any aid must be necessary, proportionate, and not distort competition contrary to the common interest.

Brussels said it received comments from several third parties that “broadly supported the project and highlighted its strategic importance for Poland’s long-term energy security and decarbonisation objectives.”

PEJ President Marek Woszczyk called the approval “a major success for Poland.”

He said it “paves the way for signing the construction contract” with U.S. companies Westinghouse, a technology vendor, and Bechtel, a construction contractor.

Adjustments to Satisfy Brussels

To address concerns raised during the investigation, Poland agreed to significant changes.

It shortened the subsidy period from 60 to 40 years, revised the CfD design to incentivize efficient plant operations and ensure responsiveness to market signals, and calibrated the strike price using a discounted cash flow model to prevent overcompensation.

Warsaw also agreed to a system that requires PEJ to share any excess profits with the state if its returns exceed normal market levels and to regularly update the cost assumptions in its financial model.

To limit market concentration, at least 70 percent of the plant’s electricity must be sold on open power exchanges, and the rest will be auctioned transparently.

Poland also promised to keep PEJ legally and operationally separate from other major energy companies.

The plant is expected to operate at an 88.5 percent capacity factor by 2040, supplying steady baseload power to industry and helping Poland reduce its reliance on coal.