At stake is a long-planned expansion of the Dukovany nuclear plant in the Czech Republic, a multi‑billion euro deal that Seoul’s KHNP has already “won” on paper. Yet fresh scrutiny from the European Commission means French utility EDF may not be out of the race just yet.
A nuclear mega‑project under Brussels’ microscope
The Czech government wants to build two new nuclear reactors at Dukovany to replace ageing Soviet‑era units and secure low‑carbon electricity for decades.
To make that happen, Prague has drawn up one of the most generous financial packages seen in European nuclear energy.
The Dukovany expansion is backed by a state loan covering 100% of construction costs, plus a 40‑year guaranteed power price.
The state plans to provide a long‑term loan at preferential rates worth between €23 billion and €30 billion, depending on final costs and financing over more than a decade.
On top of that, the project benefits from a 40‑year Contract for Difference (CfD). This mechanism sets a “strike price” for electricity: if market prices fall below it, the state pays the difference, and if market prices rise above it, the project company pays back the surplus.
The operating company, EDU II, is controlled mainly by the Czech state, with energy group ČEZ owning the minority stake. Strategically, the government is trying to lock in long‑term stability for an asset with a lifespan stretching far beyond normal political cycles.
That is where the European Commission steps in. Any state support of this scale in the EU must pass strict state‑aid rules, designed to prevent governments from unfairly tilting competition.
Why Brussels is worried
The Commission had previously approved support for a single new unit at Dukovany. Now that Prague wants to finance two reactors with a larger and more complex package, Brussels has opened an in‑depth investigation.
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Officials in Brussels are raising two big questions.
- Does the generous state loan and CfD distort competition in electricity markets?
- Does the scheme leave the project operator shielded from normal commercial risk?
The concern is that a full state loan, combined with a guaranteed price, could turn the Dukovany expansion into a near risk‑free investment, while competitors in other countries must cope with market volatility and commercial lenders.
EU rules allow state aid for nuclear power, but only if it is necessary, proportionate and does not crowd out fair competition in the internal market.
The Commission has also flagged gaps in the CfD design. It wants clarity on how performance incentives will work, how cost overruns are handled and whether the scheme encourages efficient construction and operation instead of rewarding delays and overspending.
KHNP vs EDF: a nuclear showdown with billions attached
In 2024, the Czech government picked Korea Hydro & Nuclear Power (KHNP) as the preferred builder for the two units, beating EDF and US‑based Westinghouse.
KHNP’s industrial offer reportedly came in at around €8.2 billion per reactor, an aggressive price in a sector notorious for budget and schedule slippage.
EDF, still grappling with cost overruns at its EPR projects in France and the UK, lost a contract that French officials had quietly described as a once‑in‑a‑generation export opportunity. The French group then challenged the decision before Czech authorities, arguing that KHNP’s bid would only work with hidden public support.
Local courts rejected that challenge and Prague signed the contract with KHNP in June 2025. On the surface, the race looked over.
Subsidy questions that won’t go away
While EDF failed to overturn the result at national level, the battle shifted to Brussels. The Commission has opened a separate probe under the EU rules on foreign subsidies, examining whether KHNP benefited from support from the South Korean state that might undermine fair competition in the EU.
KHNP strongly denies any illegal advantages and insists its offer complies fully with European rules.
If EU investigators conclude KHNP gained an unfair edge from non‑EU subsidies, the Czech tender process could face heavy turbulence.
For EDF, that outcome would open a door that seemed firmly closed. The French utility could be invited back into the game if the EU found the existing contract incompatible with its competition or state‑aid rules.
What a setback for Prague would look like
An in‑depth state‑aid investigation often takes years. A previous Czech nuclear support scheme took around two years to clear. Officials now expect a decision on the Dukovany twin‑reactor package around 2027.
During this period, Prague says work on the project will continue using private financing. But the shape of public support that ultimately emerges could change significantly.
| Scenario | What could happen |
|---|---|
| Full approval | State loan and 40‑year CfD approved with minor tweaks; KHNP contract proceeds broadly as planned. |
| Conditional approval | EU demands stricter risk‑sharing, lower strike price or shorter CfD; project economics tighten. |
| Partial or negative decision | Czech support scheme must be redesigned; KHNP deal could become unviable, giving EDF a second chance. |
A harsher ruling from Brussels would not automatically award the contract to EDF. Yet it could force Prague to reopen parts of the process, renegotiate with KHNP or even consider alternative suppliers if the current package proves incompatible with EU law.
Why the “contract of the century” label matters
French media have described the Dukovany deal as a “contract of the century” for EDF, with a potential value of around €16.4 billion for its offer. For a company burdened by debt and massive investment needs at home, securing a long export stream for its EPR technology would have strategic value far beyond the headline figure.
For South Korea, KHNP’s win boosts its reputation as a credible nuclear exporter, after high‑profile successes in the United Arab Emirates. Losing the project due to EU legal hurdles would hit that narrative and risk souring trade relations.
The Czech Republic, meanwhile, needs new baseload capacity as coal is phased out and demand rises. Two new reactors targeted for start‑up in 2036 and 2037 are a central plank of that strategy.
Delays at Dukovany would ripple across Central Europe’s power system, affecting prices, imports and climate targets.
Key concepts behind the battle
How a Contract for Difference shapes nuclear economics
A nuclear plant has huge upfront costs and then relatively low operating costs. Market electricity prices can swing wildly across those decades. A CfD stabilises revenues, giving investors enough visibility to accept lower financing costs.
Yet the design of the CfD is just as important as its existence. A high strike price locks in expensive power for consumers. A poorly calibrated risk‑sharing formula can encourage developers to pass on overruns instead of controlling them.
For Dukovany, EU checks focus on whether the CfD strikes the right balance between bankability and discipline. Brussels wants evidence that the operator still has strong reasons to build on time, under budget and to high safety standards.
How EU state‑aid rules can reshape national energy plans
EU member states decide their own energy mix. Some choose more renewables, some keep coal longer, some bet heavily on nuclear. Yet once state money enters the picture, EU rules kick in.
These rules try to prevent a situation where one country boosts its national champions with generous support that spills across borders, distorting electricity markets or crowding out rivals in neighbouring states.
In practice, that means any large support scheme for nuclear, gas, renewables or storage often lands on the Commission’s desk. Projects can still go ahead but may need redesigned financing, lower support levels or tighter safeguards.
The Dukovany case shows how this process can intersect with industrial competition. A decision on Czech state aid may indirectly decide whether KHNP or EDF ends up building the reactors, even though EU officials are not supposed to pick winners.
What this could signal for future nuclear deals
If the Commission takes a tough line, future European nuclear projects may need less generous state backing or more innovative structures, such as greater private‑sector risk sharing, shorter CfDs, or equity stakes by institutional investors.
Countries considering new reactors, from Poland to the Netherlands, are watching. The Dukovany decision will act as an informal benchmark for how far EU law lets states go to revive nuclear fleets while keeping markets open and competitive.
For EDF, the message is mixed. On one hand, its own foreign bids must pass the same tests. On the other, if Brussels enforces strict limits on non‑EU competitors’ subsidies, that could level the field and keep alive the chance of landing contracts that once looked lost — including this €16.4 billion “contract of the century” in the Czech Republic.
Originally posted 2026-02-10 15:22:34.