The Commission wishes to inform Romania that, having examined the information supplied by your authorities on the measure referred to above, it has decided to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union (‘TFEU’).

1.   THE PROCEDURE

(1)

On 5 January 2026, further to pre-notification contacts, Romania notified to the Commission pursuant to Article 108(3) TFEU a measure aiming to support the lifetime extension of one nuclear reactor, Cernavodă 1 (the ‘project’, the ‘notified measure’ or the ‘measure’).

(2)

The Commission requested additional information on 5 March 2026, which the Romanian authorities provided on 23 March 2026.

(3)

By letter dated 28 November 2025, Romania agreed to exceptionally waive its rights deriving from Article 342 TFEU in conjunction with Article 3 of Regulation 1/1958 (1) and to have the present decision adopted and notified in English.

2.   BACKGROUND INFORMATION

2.1.   Electricity market in Romania

2.1.1.   Romania’s electricity system

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Romania’s electricity system is characterised by a diversified installed capacity mix, comprising coal, natural gas, nuclear, hydropower, wind, solar, and smaller contributions from biomass and other sources.

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This diversification is increasingly shaped by a structural shift towards low-carbon technologies, reflected in the significant expansion of solar and wind energy projects and the phase-out of fossil fuel generation. Projections to 2036 indicate a substantial reconfiguration of the capacity mix. Coal-based capacity is expected to decline sharply from current 2.7 GW, while low-carbon sources expand significantly. Nuclear capacity is projected to increase from 1.4 GW to 2.6 GW, and both wind and solar capacities are expected to more than double, reaching 6.1 GW and 5.8 GW, respectively. These developments suggest a long-term transition toward a predominantly low-emission generation portfolio. Table 1 Installed capacity for electricity production by fuel Fuel Gross installed capacity (2024) Net power Share Projected gross installed capacity in 2036  (2) [MW] [MW] % [MW] Coal 2 762 2 162 12,5 % 130 Fossil gas 2 714 2 186 12,7 % 5 475 Hydro 6 682 6 359 36,8 % 6 832 Nuclear 1 413 1 300 7,5 % 2 600 Wind 3 095 3 035 17,6 % 6 145 Biomass/ Biogas/ Other 139 127 0,7 % 150 Solar 2 211 2 109 12,2 % 5 811 Geothermal 0 0 0 % 0 Total 19 016 17 279 100 % 27 143 (2)  Long term own estimation based on public data on www.transelectrica.ro.

(6)

When including all voltage levels, that is both transmission-connected installations and renewable generation connected to the distribution grid (such as active customers (3) and small-scale solar), Romania’s total installed capacity reached 23.15 GW as of September 2025. (4) Of this total, nuclear capacity accounted for a share of 7,2 %, thermal sources for a share of 28,1 %, hydropower for a share of 34,1 %, and other renewable sources for a share of 30,6 %.

(7)

Electricity generation patterns in 2024 differed significantly from the installed capacity structure, reflecting variations in capacity factors across technologies. Monthly electricity production from transmission connected installations ranged from 3 715 GWh in June (5) to 5 393 GWh in January 2024 (6), highlighting seasonal effects driven by hydrological conditions and demand fluctuations.

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Over the full year, nuclear power accounted for 21,05 % of total electricity generation, despite representing only 7,6 % of installed capacity, underscoring its role as a high-capacity-factor baseload source. Fossil gas and coal together contributed approximately 33,12 % of generation, while renewable sources across all voltage levels accounted for 44.87 %. Within this renewable share, hydropower dominated (29,19 %), followed by wind (13,29 %) and solar (2,39 %). Table 2 Electricity generation share by technology in 2024 Production type 2024 [%] Hydro 29,19 Nuclear 21,05 Fossil gas 20,19 Wind 13,29 Coal 12,93 Solar 2,39 Biomass 0,74 HFO 0,15 Storage 0,04 Waste 0,03

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In line with this observed system performance, Romania’s updated National Energy and Climate Plan (‘NECP’) aims to achieve an installed electricity generation capacity of approximately 32.3 GW by 2030, with around 80 % derived from low carbon energy sources, including renewable and nuclear technologies. The projected capacity expansions outlined in Table 1 are broadly consistent with this objective, particularly the planned increases in nuclear, wind, and solar capacity and the near-complete phase-out of coal-based generation.

(10)

Romania recorded a net electricity import volume of 2012 GWh in 2024, representing an increase of approximately 30 % compared to 2023. This rise was driven mainly by temporary reductions in domestic generation, including maintenance at major nuclear and thermal units and lower hydropower output due to adverse hydrological conditions, combined with greater regional market integration and price-driven cross-border trading.

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Romania’s ability to balance domestic generation variability and rising cross-border trade with neighbouring Member States is supported by an interconnection capacity of approximately 4 500 MW, with plans to reach an interconnection level of 21 % by 2030. Electricity interconnections with Hungary, Bulgaria, Serbia, Ukraine, and Moldova (particularly following synchronisation with ENTSO-E) enhance system flexibility, support security of supply, and facilitate the efficient integration of variable renewable energy through access to regional balancing and wholesale markets.

(12)

The electricity consumption in Romania was 55.1 TWh in 2025. It was steadily increasing from almost 50 TWh in 2014 to 56.22 TWh in 2021 but falling to lower values during the COVID pandemic in 2020 and energy crisis in 2022. (7) The Romanian authorities however expect that the economic development and electrification will lead to increased electricity consumption in industry, transport, services, agriculture and housing with overall electricity consumption reaching 70 to 73 TWh in 2050. (8)

2.1.2.   Structure and operation of the Romanian electricity market

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The Romanian electricity market is governed by the framework established by the Electricity and Natural Gas Law (9), which sets out the rules on market liberalisation, third-party access, unbundling, and regulatory oversight by the National Energy Regulatory Authority (‘ANRE’).

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Electricity market participants operate across the full value chain and include electricity producers, the Transmission System Operator (TSO), concessionary Distribution System Operators (DSOs) (10), and electricity suppliers (11).

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The Romanian authorities provided an overview of market participants across the upstream, midstream, and downstream segments (see Figure 1 below). Figure 1 Overview of the Romanian electricity market participants

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Electricity transactions in Romania are carried out through organized markets managed by licensed electricity market operators, through directly negotiated bilateral contracts, and through import and export transactions. The holders of a license for the activity of electricity market operator are Operatorul Pieței de Energie Electrică și de Gaze (OPCOM), licensed since December 2001, and Bursa Română de Mărfuri (BRM), licensed since March 2022. Wholesale and spot market transactions are concluded on the platforms operated by OPCOM and BRM (12), while the balancing market is operated by the Romanian TSO, which is responsible for real-time system operation, load-frequency control, and the activation of reserves.

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Romania’s electricity generation market is fully liberalised and, according to the Romanian authorities, aligned with the EU internal energy market framework. Romania has been integrated into the Single Day-Ahead Market Coupling (‘SDAC’) since November 2019 and into the Single Intraday Market Coupling (‘SIDC’) since January 2021, enabling cross-border electricity trading with Hungary, Bulgaria, and other EU Member States. Since 2018, wholesale electricity prices have been fully liberalised (13), contributing to increased market liquidity and significant participation from both public and private generators and traders.

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Trading is performed on the following range of market segments: (a) Day-Ahead Market (‘DAM’), where the majority of traded volumes are cleared based on marginal pricing (14); (b) Intraday Market (‘IDM’), which allows adjustments in near-real time; (c) Bilateral contracts forward market platform (‘PCCB’), enables medium- and long-term contracting; (d) Centralised market for universal service (‘CMUS’) and green certificates; (e) Balancing Market, operated in real-time by the TSO, which ensures load-frequency control, reserves, and grid stability.

(19)

Pursuant to national legislation, electricity producers and suppliers are required to trade a defined share of their forecasted electricity volumes, currently set at 50 %, on markets other than the DAM, IDM, and Balancing Market.

2.1.3.   Competition in the Romanian electricity generation and supply

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As of 2024, the Romanian retail electricity market comprises about 100 licensed suppliers, including both universal service providers and fully competitive retailers. The Romanian authorities put forward that more than 40 % of household consumers have switched to competitive supply contracts.

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The Romanian authorities provided market shares of the five most significant market actors in terms of installed capacity as shown in

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Table 3 Top 5 players by installed generation capacity and market shares by capacity in 2024 Company 2024 [MW] [%] Hidroelectrica S.A. (15) 6 480 34,82 % Nuclearelectrica S.A. 1 413 7,6 % Complexul Energetic Oltenia S.A. (16) 1 965 10,55 % OMV Petrom S.A. (17) 860 4,62 % PPC Energy (18) 1 330 7,14 % Total Capacity  (19) 18 610 64,73 % (15)  See Producere energie electrica. (16)  See Guvernanta corporativa - Complexul Energetic Oltenia. (17)  See Centrala electrică de la Brazi a OMV Petrom - energie fiabilă pentru România | OMVPetrom.com (18)  See PPC în România - PPC. (19)  See SNN – Annual Report, 2024.

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According to Romania, the main players in terms of electricity generation from installations connected to the transmission grid are Hidroelectrica, Nuclearelectrica, OMV Petrom, CE Oltenia (December 2024) and Electrocentrale Bucuresti (20) as shown in Table 4. Table 4 Top 5 players by annual electricity generation and market share in 2023 and 2024 Company Production type 2023 2024 Production share (%) Net production [TWh] Production share (%) Net production [TWh] Hidroelectrica S.A. Hydro run and reservoirs 33.4% 17,8 29,4 % 14 Nuclearelectrica S.A. Nuclear 19.4% 10,3 21,1 % 10 Complexul Energetic Oltenia S.A. Fossil Brown coal / Lignite 11.4% 6,1 10,9 % 5,2 OMV Petrom S.A. Gas 9.7% 5,2 12,7 % 6,0 Electrocentrale Bucuresti S.A. Gas 3.0% 1,6 2,9 % 1,4

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The Romanian electricity generation market is described by the Romanian authorities as moderately concentrated, with the top three producers, i.e. Hidroelectrica, Nuclearelectrica, and CE Oltenia, accounting for approximately 60 % of total output. From a quantitative perspective, the Herfindahl-Hirschman Index (‘HHI’) (21) for the Romanian generation market falls within the 1 500 to 2 000 range, confirming its classification as moderately concentrated. This level has been stable or decreasing, notwithstanding the planned decommissioning of coal capacities, due to the rapid influx of new renewable energy producers (22). Romania explains that this trend has been reinforced by increased investment from international independent power producers driven by support mechanisms like Contracts for Difference (CfDs), the Modernisation Fund, and the Recovery and Resilience Facility (RRF), enabling the deployment of wind, solar, hybrid projects, and utility-scale storage.

(25)

To illustrate this analysis of the electricity market, the Romanian authorities provided a brief assessment of competition at power supply level, based on ANRE data (23), with a detailed representation of the market share situation in 2024, at the power supply level as shown in Figure 2. Figure 2 Market shares of active participants on the electricity market based on the quantities of electricity sold to end consumers, 2024

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The Romanian authorities also argue that in two different evaluations of the market concentration (24), the results indicate either an HHI of 676 and a Concentration Ratio of 4 biggest firms (CR4) of 43 %, or an HHI of 804 and a CR4 of 50 %, both indicating an unconcentrated power supply market (25).

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The Romanian Authorities also provided an assessment of competition based on the Romanian Competition Council (‘RCC’) analyses, which evaluate competition in key sectors in Romania by applying the Aggregate Index of Competitive Pressure (‘AICP’) (26). For the period 2023-2024, the Romanian authorities indicate that the power generation and power supply markets are placed in the middle group of industries monitored by RCC, meaning that they are characterised by moderate competitive pressure, in comparison to other sectors. In this report, figures indicate that the power supply market is ranked higher than, but rather close to, power generation, and this difference has been constantly present over time in RCC’s evaluation, probably due to the relatively lower barriers to entry, the lower concentration and other differences in the factors considered by RCC (27).

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The results take into account the prolonged and intrusive measures imposed by the Romanian government in the energy sector in the past couple of years, in the context of the regional energy crisis. According to Romania, these measures have been largely considered detrimental to competition, especially in the power supply market, which has led to a decline of the AICP evaluation. Romania puts forward that, consequently, the recent termination of these measures (as of July 1st, 2025) is likely to spur competition in the energy sector, particularly at the supply level.

2.1.4.   Importance of nuclear energy for the energy transition and security of supply

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Following the Russian war of aggression against Ukraine and the energy crisis that ensued, Romania has adopted a series of legal measures aimed at advancing its energy transition while ensuring energy security.

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Under the National Recovery and Resilience Plan (28), Romania is planning to phasing-out coal-based energy production by 2030, contributing to decarbonisation goals. Romania has established specific targets for reducing greenhouse gas (‘GHG’) emissions relative to 1990 levels including an 85 % reduction by 2030 and has committed to the gradual elimination of approximately 4 920 MW of coal-based installed capacity (lignite and hard coal), with 3 070 MW to be withdrawn by the end of 2025 and the remaining capacity by 2032 at the latest.

(31)

The updated Integrated National Plan for Energy and Climate Change (‘PNIESC’) 2021–2030 emphasises the central role of nuclear energy in achieving decarbonisation objectives and ensuring energy security. Nuclear energy is recognised for offsetting the withdrawal of fossil fuels-based energy capacities and providing stability and predictability in electricity supply amidst a delay in developing new gas plants. While the PNIESC recognises nuclear energy as a non-emitting source of electricity, both renewable and nuclear capacities are to be expanded in order to phase out fossil fuel-based production.

(32)

The Long-Term Strategy for Reducing Greenhouse Gas Emissions “Romania Neutral in 2050” includes measures for the refurbishment of Units 1 and 2 of the Cernavodă Nuclear Power Plant (‘NPP’), as well as for the construction of two new units on the same site (Units 3 and 4 of the Cernavoda NPP). The refurbishment of Unit 1 is prioritised under Romania’s National Energy Strategy (‘NES’) 2025–2035. In terms of timelines, Romania aims to complete the lifetime extension of Unit 1 by 2030 and to commence the construction of Unit 3 by 2031 and Unit 4 by 2032.

(33)

Romania argues that nuclear power contributes to decarbonisation efforts by replacing retiring coal capacity, meeting future demand, and diversifying electricity generation. The refurbishment of Unit 1 at the Cernavodă NPP is considered essential for providing stable baseload supply and balancing variable renewable energy production as renewables increase in the energy mix.

(34)

In the context of energy security, the lifetime extension of Unit 1 is considered vital for network stability, complementing the required renewables and flexible capacity development necessary to reach net zero in 2050. Romania explains that this ensures balance amidst fluctuations specific to renewable energy, expected to accelerated growth by 2030 according to the revised NECP and the NES, playing a major role in ensuring the stability of the grid and helping to mitigate system costs.

(35)

Romania explained that the TSO Transelectrica emphasised in its annual reports and in the Energy Transmission Network (‘ETN’) Development Plan (29) the need for stable generation nodes in strategic regions in order to minimise losses, increase operational flexibility, and facilitate the integration of renewable sources. According to the Romanian authorities, the modernisation of Unit 1 of the Cernavodă NPP interconnection systems, including transformers, high-voltage substations, automation, and SCADA monitoring systems, will significantly affect the operating parameters of the ETN with direct implications for system costs and the security of supply to consumers.

(36)

The Romanian authorities further explain that the feasibility study for the refurbishment of Unit 1 of the Cernavodă NPP provides for the modernisation of the plant’s electrical systems (30) and critical equipment, with a direct effect on increasing reliability and operational safety, thereby supporting the overall stability of the National Power System.

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Romania also states that it is already affected by high energy prices and price disparities compared to other EU Member States, mainly due to limited interconnection capacity (particularly in the centre of the EU) and a lack of stable generation capacity, highlighting the urgent need for nuclear refurbishment.

(38)

If the project is not implemented, Romania foresees significant difficulties and high costs in replacing the lost nuclear baseload capacity, leading to high price volatility, structurally higher system costs, and increased geopolitical risk due to fossil fuel reliance, which risks jeopardising the achievement of climate objectives set in the PNIESC and REPowerEU.

2.2.   Objectives and justification of the measure

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Romania's existing nuclear fleet consists of two CANDU pressurised heavy-water reactors (31) at the Cernavodă NPP (32), operated by state-owned Nuclearelectrica. Unit 1 began commercial operation in December 1996 and Unit 2 in 2007, collectively supplying approximately 20 % of Romania's electricity. As the estimated lifetime of the Unit 1 reactor is set to expire in 2027, the extension of its life through refurbishment, which could secure an additional 30-year operating cycle, is crucial to maintaining this essential capacity.

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Romania intends to provide an aid package (see section 5) for the refurbishment and lifetime extension of Unit 1 of the Cernavoda NPP. The measure aims to ensure the long-term availability of low-carbon baseload generation, contributing to national and EU decarbonisation targets, maintaining security of supply during the transition to an energy system with high shares of intermittent renewables, and preserve nuclear safety and operational continuity.

(41)

The refurbishment project involves replacing and modernising key reactor components that limit the unit’s operational life. Through a reactor "retubing" process and the modernisation of essential nuclear and conventional infrastructure, the project seeks to secure an additional 30-year life cycle, directly supporting the objectives of energy stability and security.

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Romania argues that significant market failures justify State aid for the refurbishment and lifetime extension of Unit 1. Given the substantial upfront investment costs and long-term economic risks from energy price uncertainty under market conditions, financing the project without considerable state support is seen as impossible by the Romanian authorities.

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The Romanian authorities explain that total estimated value of the project, i.e. approximately EUR 3.584 billion, exceeds the beneficiary’s financial capacity to support it using its own resources or private financing based on market terms. Nuclear infrastructure investments, characterised by high initial costs and long amortisation periods, entail commercial risk that market actors are unwilling to assume in the absence of a public support framework.

(44)

Recent fluctuations in electricity prices and uncertainties regarding their evolution add a significant barrier to attracting private financing for nuclear refurbishment projects. Additional nuclear-specific risks include technical and project management risks, waste and decommissioning risks, market and investment risks related to revenue uncertainty over the multi-decade horizon that private investors cannot manage alone, and risks related to future policy changes over the lifespan of the investment.

(45)

Romania submits that the project faces compounding financial, technical, and operational risks driven by extended timelines, technological complexity, and multi-stakeholder coordination challenges across 143 months of delivery. These factors increase price uncertainty, require elevated financing premiums, cause information asymmetries, and imply heightened exposure to cost overruns and delays, further complicated by changes in regulatory framework over a long-term period and fiscal uncertainty e.g. due to developments in tax policies.

(46)

According to the Romanian authorities, the necessity of Unit 1’s refurbishment is technically substantiated by the draft resource adequacy assessments performed by the TSO, Transelectrica, in line with ENTSO-E methodologies. This study shows that without the approximately 700 MW of firm, baseload capacity from Unit 1 of the Cernavodă NPP, Romania’s key reliability metrics, notably the Loss of Load Expectation (‘LOLE’ (33)), would exceed the common European reliability standard of 3 hours/year. The project is therefore, according to Romanian authorities, essential to maintain system adequacy and avoid significant levels of Expected Energy Not Served (‘EENS’), safeguarding long-term security of supply.

(47)

According to the Romanian authorities, in 2027, when the end of the life cycle of Unit 1 of the Cernavodă NPP is expected, the electricity system in Romania will be under pressure due to the gradual phase-out of the coal-based capacities and an increased degree of intermittency of production from renewable sources. The lack of prompt action. i.e. not carrying out the refurbishment project, could create an immediate and long-term gap in domestic production (34), which would have to be covered either by massive imports, which are also subject to network limitations, or by postponing the decommissioning of coal-based power plants, contrary to Romania’s environmental commitments.

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Romania puts forward that especially during times of high demand, coupled with low-RES production, it has been in a net import position. TSO data show import volumes being frequently between 1 500 and 2 000 MW during peak hours in 2024, with values of nearly 3 000 MW recorded on some occasions. Some projects are potentially expected to close part of the gap between domestic production and consumption (e.g., new gas-fired power plant at Mintia, with about 1 000 MW in the first phase or refurbished power plant at Iernut, with 450 MW installed capacity) while other considerations are expected to further widen it (e.g., planned closure of the coal-based plants, occasional lower hydropower output due to droughts, coupled with an expected increase of electricity consumption). Under these circumstances, closing Unit 1 of the Cernavodă NPP would put significant pressure on the system and leave it exposed to the intermittent RES production and expensive imports.

(49)

ENTSO-E in its European Resource Adequacy Assessment 2024 (‘ERAA 2024’) identified low adequacy concerns for Romania with LOLE bellow 1 hour in all studied years up to 2035. (35) Nevertheless, ERAA 2024 also states that the expected investments in new Combined-Cycle Gas Turbine (‘CCGT’) capacities will likely not materialise by 2035 and that roughly 2.15 GW of existing CCGT capacities will cease to be economically viable by 2035, with the consequence that adequacy concerns for both Romania and the region may increase. (36)

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Romania therefore submits that the refurbishment of Unit 1 promises significant positive externalities such as enhanced energy security, progress in decarbonisation, and grid stability. In Romania’s view, these benefits are vital to national and European strategic objectives and justify public support to address market failures and ensure project viability.

3.   THE BENEFICIARY

(51)

The beneficiary of the notified measure is Nuclearelectrica National Company S.A. (‘SNN’), a Romanian state-owned energy producer specialising in the nuclear sector. SNN operates two CANDU reactors at the Cernavodă. The company is also involved in uranium concentrate processing at Feldioara and in the production of medical radioisotopes.

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The company is listed on the Bucharest Stock Exchange, with the Romanian State holding, via the Ministry of Energy, a 82,49 % of its shares.

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Beyond current operations and the notified investment, SNN is pursuing several investment projects. These include the completion of Units 3 and 4 at Cernavodă, a brownfield project at around 40 % completion, and the development of small modular reactors at the former Doicești coal plant site.

(54)

In 2024, SNN accounted for 21,1 % of total electricity generation in Romania, producing approximately 10 TWh, making it the second largest generator after Hidroelectrica (see Table 4). In terms of installed capacity, SNN's 1413 MW nuclear capacity represents 7,6 % of total installed generation capacity in Romania (see Table 3).

4.   DESCRIPTION OF THE PROJECT

4.1.   The refurbishment project

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To address the projected increase in energy consumption (see recital (12)), meet decarbonisation targets, and ensure energy security the Romanian authorities have established clear objectives for the development of the nuclear sector, targeting a total installed capacity of approximately 3 262 MW by 2032, of which 2 800 MW are planned to come from CANDU-type technologies, and 462 MW from small modular reactors (‘SMR’).

(56)

Given the significant costs associated with constructing a new NPP, refurbishment of existing nuclear units is considered a strategic and cost-effective alternative for the decommissioning of Unit 1 in Cernavodă. According to the Romanian authorities, a refurbished nuclear unit is capable of operating at design parameters for another operating cycle, with an investment of less than half the cost required to build a new similar facility. Additionally, the estimated duration for refurbishing a nuclear unit is significantly shorter than the time needed to construct a new unit.

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Relying on the technical experience from the successful implementation of refurbishment projects in Canada, Korea, and Argentina for the same type and technology of reactors (37), Romania intends to provide a State support package to incentivise the refurbishment project, aiming to ensure an additional 30-year life cycle for Unit 1 of the Cernavodă NPP.

(58)

For this purpose, Romania plans to support major upgrades of the essential infrastructure on both the nuclear and conventional sides of the plant. The primary goal of the refurbishment project is to extend the lifespan of Unit 1 of the Cernavodă NPP by an additional 30 years through the replacement of reactor tubes, refurbishment and/or replacement of other equipment, both from the nuclear part, as well as the non-nuclear part of the plant, and additional activities required under current standards and requirements of nuclear safety to ensure the safe long-term operation of the plant. The secondary objective of the refurbishment project is to modernise and improve the equipment of Unit 1 of Cernavodă NPP, for enhancing operational safety beyond that achieved in the first life cycle.

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As regards the management of waste, the Romanian authorities explain that the spent fuel removed from the reactor at the beginning of the Cernavodă Unit 1 refurbishment outage (38) will be discharged and stored underwater and cooled down in the Spent Fuel Bay (‘SFB’) below Unit 1 of Cernavodă NPP. After 6 years it will be moved to dry storage facilities, composed of MACSTOR modules.

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According to Romania, the low and medium radioactive waste that will result from the refurbishment of Unit 1 (39) along with the radioactive waste that will result from the operation the refurbished Unit 1 and current Unit 2 must be stored in a new facility. A study (40) from 2021 identified the Unit 5 (41) reactor building as the most advantageous solution, from a technical and economic point of view, for the above-mentioned storage. As such, the transformation of the Unit 5 reactor building into a radioactive waste storage facility is to be completed before commencement of the refurbishment outage. The transformation of the Unit 5 reactor building is part of the project and of the EPC Agreement concluded for the Cernavoda Unit 1 refurbishment.

4.2.   Current state of development and planning of the project

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Romania explained that the initial strategic planning of the project began in 2010, with a conceptual document (42) approved by SNN’s Board of Directors. Although priorities shifted temporarily following the Fukushima incident in 2011, the strategy was revisited and refined between 2011 and 2013. In October 2013, the Technical-Economic Committee of SNN approved the refurbishment strategy and the realisation of preliminary technical and economic studies and of a feasibility study to define the final scope and execution plan.

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In December 2013, the Extraordinary General Meeting of Shareholders (‘EGMS’) of SNN approved the strategy and the refurbishment plan for Unit 1 of the Cernavodă NPP (43), aimed at extending its operational life, as well as the initiation and execution of the development of technical-economic studies, nuclear safety assessments, and licensing documentation required to define the final scope of the Project.

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In October 2021 (44), the investment strategy of SNN for the period from 1July 2020 to 1 July 2025, was approved, with the project being a strategic priority objective.

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In February 2022, the EGMS of SNN approved the investment decision regarding the refurbishment project of Unit 1 of the Cernavodă NPP. Romania explains that the EGMS’s investment decision was based on expected project cost of EUR 1.85 billion and on the expectation that project could be financed from SNN’s own resources and market financing, and would be profitable on its own commercial merits, without any State aid. Romania explains that after the 2022 investment decision, the project experienced cost increases due to exogenous shocks: the war in Ukraine, the ensuing inflation surge, energy market disruption and global supply chain dislocation, which could not reasonably have been foreseen at the time of the original investment decision. The feasibility study was subsequently updated in December 2024, resulting in a significantly increased project value and revised implementation schedule.

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In October 2024, the Romanian Government approved a memorandum regarding measures for continuing the “Refurbishment of Unit 1 at Cernavodă NPP” Project. This memorandum stated that, given the estimated project value, financial support from the Romanian state would be imperative to secure funding sources, without which the feasibility and implementation of the Unit 1 refurbishment project would be at risk.

(64a)

In January 2025, SNN’s EGMS approved the decision to continue the investment based on the revised feasibility study reflecting the higher costs of the project and the indication that State aid was required to ensure that the project remains economically viable.

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Romania further explained that as of November 2025, SNN has concluded three pre-project contracts (PPC), an engineering, procurement and construction (EPC) agreement (45), a refurbishment services contract and a contract for technical support which together amount to approximately EUR 2.998 billion (of which the EPC contract covers the largest share). This total also includes approximately [100–600] million euro which have already been spent from SNN’s own resources covering the costs of staff and other costs directly attributable to the project. Romania explained that the preparatory works after the adoption of the Government memorandum approving State aid to the project were carried out in the full expectation that the project would receive support through the notified measures, given that the beneficiary was aware of Romania’s intention to grant such support and cannot be severed from the State aid package in support of the project. However, Romania considers that the pre-project expenditure of approximately EUR 225 million incurred or committed before the date of the Government’s State aid memorandum is severable from the State aid intervention because it was financed from SNN’s own resources and was carried out on a commercial basis, without any expectation that the project would receive State aid.

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The Romanian authorities submit that the project has received or is expected to receive the necessary permits for its implementation. Romania further explained that the project was subject to a detailed environmental impact assessment with cross-border consultations, conducted in compliance with EU secondary legislation requirements. The cross-border environmental assessment was coordinated by the Ministry of Environmental, Waters and Forest. The participating countries were Austria, Moldova, Bulgaria, Ukraine and Hungary (46).

4.3.   Selection of the EPC contractor

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The engineering, procurement and construction (‘EPC’) contract for the retubing and refurbishing works and construction of project infrastructure was concluded on 19 December 2024 between SNN, as the owner, and Candu Energy Inc., Canadian Commercial Corporation, Ansaldo Nucleare S.P.A., and Korea Hydro and Nuclear Power co., LTD. (‘KHNP’) (each, individually, a ‘Contractor’, and collectively, the ‘Consortium’).

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The Romanian authorities explained that the Consortium was selected by SNN on the basis of a negotiated procedure without prior publication justified (47) by the absence of competition due to technical exclusivity and protection of intellectual property rights. Romania argues that this procedure was applied in accordance with the legal exceptions provided under the applicable legislation, taking into account the specific technical, safety, and regulatory requirements associated with nuclear activities, as well as the necessity to ensure continuity, safety, and compliance with the strict standards governing nuclear sector operations. Romania provided the provisions and norms related, in particular, to Law no. 99/2016 on sectoral procurement and specific nuclear safety legislation, including the National Commission for Nuclear Activities Control (CNCAN) and the Agency for Public Procurement (ANAP) provisions (48).

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The Romanian authorities mention that, based on the legal framework set out above, and given the complexity of the activities in the scope of the refurbishment project, which requires the use of the specific technical expertise of the original designers of Cernavoda NPP, SNN conducted the negotiations with Candu Energy Inc. as the legal successor of the original designer (49) of the nuclear side systems (Nuclear Side of the Plant – NSP), and Ansaldo Nucleare S.p.A, Italy, as the original designer of the conventional side systems (Balance of Plant - BoP) (both of them are referred to as the ‘original designers’).

(71)

Considering that the implementation of the refurbishment project entails the execution of certain categories of construction-assembly works, civil construction works, which are not part of the scope of activity of Candu Energy Inc. and/or Ansaldo Nucleare S.p.A., the two original designers formed a partnership, formalised under a Consortium Agreement concluded in September 2023, with KHNP (50). Romania submits that this collaboration is based on the willingness of the original designers to provide KHNP all the necessary documents and information, including confidential and/or intellectual property rights-protected information, for the purpose of implementing the project. This is also based on previous experience of KHNP in refurbishment works on Candu-type reactors, notably the refurbishment project for Wolsong Unit 1, a CANDU-6 model, completed by KHNP between 2009-2011, as well as their familiarity with the Cernavodă NPP site in Romania, after the execution, in June 2023, of the EPC contract for the completion of Europe’s first Tritium Removal Facility at Cernavodă NPP, giving KHNP a unique position for implementing the project as part of the Consortium. The association was also joined by CCC, a Crown corporation wholly owned by the Government of Canada.

(72)

The scope of the EPC contract covers the development of the detailed design, procurement of equipment and materials, execution of retubing and refurbishment works, as well as construction of the necessary infrastructure for the refurbishment and 30-year lifetime extension of Unit 1 of Cernavodă NPP. As put forward by the Romanian authorities, it also involves removing all the reactor’s fuel and heavy water and isolating it from the rest of the power station before it is dismantled.

4.4.   Technical aspects of the CANDU reactors and load-following capabilities

(73)

Romania provided technical details regarding the modulation (or load-following) capabilities of Unit 1, pre- and post-refurbishment.

(74)

Romania explained that the CANDU 6 reactor that will be installed in Unit 1 at Cernavodă post-refurbishment, is technically capable to operate at fixed power loads between 60 % and 100 % of full power (‘FP’). Nevertheless, the Romanian authorities argue that this limited flexibility is not suitable for continuous mode of operation and, consequently, that it is less suitable as means of immediate reaction to market signals.

(75)

Romania explains that nuclear safety requirements impose operation at fixed power output or with only very limited power manoeuvres. According to Romania, the standard operating mode of Unit 1 is “Turbine following Reactor”, meaning that the reactor power is set to the desired setpoint as requested by the operator.

(76)

Romania explains that a load-following mode of operation, which implies that the reactor output is modulated in response to demand fluctuations, is not recommended because power fluctuations in the turbine, which are transmitted to the reactor, degrade the performance of the reactor’s control system.

(77)

On the contrary, a “Turbine following Reactor” mode ensures the reactor power is always under the operator’s control, and any power manoeuvre has the approval of the licensed shift supervisor under the current unit licence issued by the regulatory body (i.e., the National Commission for Nuclear Activities Control, ‘CNCAN’). Operating at lower power than nominal requires a new power setpoint approved by a licensed shift supervisor. For stability considerations, the reactor operating at lower power must have a reactivity plan dependent of the core status and once established, shall remain stable at the new setpoint for the next 24-48 hours to facilitate uniform distribution of the spatial neutronic flux.

(78)

During reactor refuelling, there are operator-requested power setpoint modifications for nuclear safety considerations in the range of 90 % FP to 100 % FP, according to the specific Reactivity Plan of the day (51).

(79)

Consequently, the Romanian authorities submit that modulation using “Reactor following Turbine” mode should be understood as a feature, not as a continuous mode of operation, as the stability of operation at fixed reactor power and limited power manoeuvres reflect nuclear safety requirements. As such, this capability is used in the CANDU operating units in case of defects and/or abnormal conditions when operating at 100 % FP and at start-up or recovery after a transient (52) and to prevent poisoning of reactor due to Xenon build-up by using the condenser discharge valves.

(80)

The Romanian authorities therefore submit that Unit 1 (as well as Unit 2) is then solely to be operating as baseload, where the turbine is following the reactor and there is no modulation in reactor power. As stated by Romania, normal and safe operation of the unit is baseload, as documented in the protocols with the National Grid (53).

(81)

Although the capability to operate at power level from 60 % FP to 100 % FP is applicable for all units (1-2) in the circumstances presented, the Romanian authorities argue that modulating operation is not and will not be acceptable and/or licensed for Units 1 and 2 of the Cernavodă NPP. Notably, the operation in the range between 60 % and 80 % of full power is not allowed due to the induced stress on the equipment of the BOP (54) side. This is mainly due to the design of the steam discharge system to the condenser that is different from other CANDU 6 NPPs. In marginal conditions, when there are challenges in the grid due to low consumption, power reductions were considered from 100 % FP to max 80 % FP, limited in number per year, and with the condition to remain stable at the new level between 24h to 120h (depending on the power level).

(82)

Therefore, the Romanian authorities submit that the Unit can safely operate at different power levels between 80 % and 100 % of full power. However, the cycling between 85 % and 100 % must be limited to 100 cycles per year maximum and the cycling between 80 % and 100 % must be limited to time intervals greater than 5 days between two cycles.

(83)

Over the long term, SNN might offset the inherent technical operational constraints by investing in storage capacities or entering into storage services contracts.

4.5.   Impact of the project on the electricity market

(84)

According to the Romanian authorities, the refurbishment of Cernavodă Unit 1 NPP will affect the Romanian electricity market across three phases.

(85)

In the period leading up to refurbishment, which denotes the typical commercial functioning of the plant and captures the actual operational dynamics until the end of August 2027, Units 1 and 2 are expected to jointly contribute around 1 400 MW gross of electricity, equating to roughly 18 to 20 % of the country’s total electricity output. Presently, with Romania’s electricity generation market being moderately concentrated but open to competition, key state-owned entities, like Hidroelectrica, SNN (55) and CE Oltenia, play significant roles, supplemented by increasing private investments in renewable energy. In this environment, Romanian authorities affirm that SNN competes fairly, without any preferential dispatch.

(86)

The shutdown period will start in 2027 and will last for 33 months in accordance with CANDU refurbishment standards. This will reduce SNN’s generation share to about half (approximately 9 to 10 %). To fill the short-term supply gap during refurbishment phase, Romania will depend on cross-border electricity imports, utilising its interconnection capability and participation in the EU’s Single Day-Ahead and Intraday Markets, alongside a rapid increase in renewable energy generation, mainly wind and solar, facilitated by CfDs, corporate Power Purchase Agreements (‘PPAs’), and EU funding such as the Modernisation Fund and the RRF. It is anticipated that over 7 GW of additional renewable energy sources (PV & Wind) will be added by 2030. (56)

(87)

In the phase following refurbishment, Unit 1 will be reintroduced to the market and resume commercial operations with the same installed capacity (approximately 700 MW net), as the aid measure does not contribute any extra capacity to the system. Romania maintains that the generation market structure at that time will mirror the pre-2027 era, and despite the changes in market share of significant companies in the electricity markets mainly due to rising capacities of the renewable sources, the Romanian authorities expect SNN to regain its initial position on the market.

4.6.   Financing structure

(88)

Romania submitted that total overnight costs of the project amount to EUR 2.998 billion. Based on the Feasibility Study of 2024, the total estimated project costs including inflation and financing costs during construction amount to EUR 3.584 billion and exceeded SNN’s financial capacity to support the refurbishment from its own resources.

(89)

These costs are planned to be financed as follows: (a) SNN’s own resources of EUR [100-600] million; (b) A non-reimbursable grant of EUR 600 million; (c) State-guaranteed commercial loans of EUR [1.5-3] billion;

4.7.   Revenues and costs of the project

(90)

Romania submitted a financial model based on a discounted cash-flow analysis which forecasts future streams of cash flows, including the revenues and costs of the investment, and discounts them to determine the net present value (‘NPV’) of the project. The financial model also determines the strike price of the two-way Contract for Difference (CfD) (see section 5.3) at a level where the NPV of the project is zero, which allows the project to reach its target rate of return (see section 4.8).

(91)

The financial model assumes a 33-month refurbishment phase and a 30-years operational phase. Cernavoda Unit 1 is expected to stop producing power in September 2027 and the production is expected to restart in May 2030.

(92)

The financial model submitted by Romania uses several assumptions regarding market price, the NPP’s availability, construction costs, operating costs and decommissioning costs and other relevant assumptions such as regarding capital expenditure and financing of the Project. Romania plans to provide SNN with direct price support in the form of a two-way CfD for a duration of 30 years, i.e. the expected operational lifetime of the reactor after the refurbishment(see section 5.3). Throughout the CfD period, the NPP will obtain market revenues by selling its output either on organised markets or through PPA auctions and the CfD will top or claw back these market revenues so that the plant effectively receives the strike price per MWh produced.

(93)

Since the CfD is production-based (see section 5.3), the financial model assumes the power plant operates at full capacity whenever it is available. Therefore, the model adjusts the capacity factor to 86 % for years with scheduled maintenance and it increases it to 98 % in years without maintenance. Romania explained that outages for maintenance and refuelling will be held every two years, at an average of 44.5 days per year and that unplanned outages, which could occur due to unexpected technical difficulties are estimated at 150 h/year.

(94)

Electricity sales constitute the vast majority of the NPP’s revenues. They are calculated by multiplying the volume of electricity produced, as outlined above, by the projected market prices. The Romanian authorities refer to the Baringa T3 2024 Reference Scenario for wholesale prices in Romania, which estimates a relatively stable level until 2030 ([80-100] EUR/MWh), and thereafter a gradual decline to [75-95] EUR/MWh by 2060 (in real terms). Wholesale electricity prices are adjusted according to European inflation (HICP), also provided by Baringa T3 2024.

(95)

Aside from income generated from electricity sales, SNN records additional revenues that represent, on average, around 3 % of its total revenues. These largely encompass revenues from electricity transmission (57), revenues from investment subsidies, revenues derived from reversals of provisions and depreciation, along with other operating revenues.

(96)

In the baseline scenario, the strike price of the CfD is estimated to be [80-100] EUR/MWh (at 2024 prices).

(97)

The Romanian authorities estimate the overnight costs of the project at EUR 2.998 billion for the project. These costs cover the EPC contract, the EPC contract for the turbine, the contracts for retubing activities as well as some costs shared with the project of refurbishment of the Unit 2. The EPC contracts costs are EUR [1-3] billion overnight in Euro 2024. The shared costs with Unit 2 are estimated at EUR [100-300] million and represents a set of specific assets (infrastructure, retubing tools) that will also be used in the refurbishment of Unit 2, thus a 50 % allocation was allocated to the refurbishment of Unit 1.

(98)

In the base case scenario, total CAPEX is estimated at EUR 3.180 billion in nominal terms. This estimation is based on the contracts that have already been signed which cover all the project’s requirements. Romania estimates that the CAPEX costs of the Project amount to EUR 3.180 million, and the total project costs including inflation and capitalised cost of financing to be EUR 3.584 billion.

(99)

Romania explained that the cost-plus scope of the EPC Agreement (which includes the procurement of equipment, non-nuclear infrastructure, and project management services) implies that cost overruns are borne by SNN in accordance with the contractual terms (see recital (165) and section 5.4). This risk-sharing reflects the technical and strategic complexity of certain elements that are outside the investor’s reach, that are specific to similar long-term projects and that cannot be considered standard investment risks. However, under the CfD contract, no upward adjustment of the Strike Price is permitted in the event that construction costs exceed initial assumptions, except for the cases when such overruns are generated by a change in legislation. Romania argues that SNN has therefore a strong incentive to provide realistic estimates and avoid cost overruns on those elements.

(100)

The operating expenditure (“OPEX”) of the project, totalling EUR [8-11] billion ([50-70] EUR/MWh) between 2027 and 2060 is based on SNN’s experience in running the unit and benchmarking from similar refurbishment projects across the world. The main component of the OPEX are staff cost ([25-40]%) and fuel costs ([10-15]%). The variable costs are estimated at [12-16] EUR/MWh (in real terms). The main components include [3-7] EUR/MWh for fuel costs and [3-7] EUR/MWh for variable operation and maintenance (O&M) costs. As set out above, provision of [2-4] EUR/MWh for decommissioning and waste management is also included in the financial model. Specifically, the payment of the National Agency for Radioactive Waste Management (“ANDR”) fees for the establishment of the financial resources for the decommissioning of the NPP (1.2 EUR/MWh) and for the disposal of the spent fuel and radioactive waste produced (2.8 EUR/MWh) make up about [10-15]% of the OPEX.

(101)

Since the operational life of Unit 1 post refurbishment is expected to be 30 years, the Romanian authorities have considered adjustments for inflation for the OPEX of the plant. Considering that OPEX is mostly sourced locally, Romania put forward that they have applied the Romanian inflation curve. Romania has also considered adjustments for inflation for the electricity prices, since the market price forecasts express the prices in real terms.

(102)

For the project’s CAPEX, the indexation of the elements was estimated based on the provisions of the signed contracts (e.g., EPC, PPC, PMO), which have clear stipulations regarding indexation. The CAPEX value is depreciated over the 30-year operation period at fixed value (i.e., the annual depreciation is not indexed) (58).

(103)

Romania provided information regarding the indexation used in the financial model as presented in the table below. Table 5 Indexation used in the financial model Element Index Base date Capex recurring Europe inflation (HICP) Baringa European Reference Case - 2024 Q3 Operational costs Romania inflation Baringa European Reference Case - 2024 Q3 Revenue Europe inflation (HICP) Baringa European Reference Case - 2024 Q3 Capex RTH-U1 CAD: Professional, scientific and technical services for Canada Average weekly earnings by industry, monthly, not adjusted for seasonality (reference 14-10-0203- 01), published by Statistics Canada at the URL address: https://www.statcan.gc.ca/eng EUR: HICP index related to Euro area [EA]* communicated by EUROSTAT USD: HICP index related to Euro area [EA]* communicated by EUROSTAT N/A Capex RTH-U2 Europe inflation (HICP) Baringa European Reference Case - 2024 Q3 N/A

4.8.   Target rate of return

(104)

On the basis of an independent analysis by PwC (59), the Romanian authorities estimate the project’s target Internal Rate of Return (IRR), set at the level of the Weighted Average Cost of Capital (WACC), at [7-9]% (nominal, post-tax), with the lower and upper bounds at, respectively, [6-8]% and [8-10]%.

(105)

The Romanian authorities state that the WACC was estimated in EUR, nominal terms, after tax, as of the reference date of December 31, 2024 and computed on the basis of a generally accepted methodology. The formula used is the following: WACC = Ke * (1 – D /( D + E )) + Kd * D /( D + E ) Where: Ke = Cost of equity, Kd = After-tax cost of debt, and D/(D+E) = Target debt ratio

(106)

Regarding the cost of equity (Ke) calculation, the Romanian authorities rely on the following formula:

Cost of equity = [(1 + Rf) * (1 + CRP) – 1] + Betae * EMRP

Where:

Rf, the long-term nominal risk-free rate, derives from the prevailing yield on a (quasi) risk-free investment in the capital market. The Romanian authorities selected the yield of an AAA EUR-government bond denominated in EUR, with a 20-year maturity, i.e. the yield of a German sovereign bond. The risk-free rate was estimated at [2-4]%.

CRP, the Country Risk Premium for Romania, is calculated as the difference between the yield of government bonds issued by Romania (6,3 %) and the risk-free rate (2,6 %), both with 20-year maturity. The country risk premium for Romania therefore amounts to [2-4]%.

Betae , the equity beta of the project, was estimated based on historical data collected from S&P Capital IQ for 14 comparable companies (60) operating in the electricity production sector, with a significant share of nuclear electricity production in their portfolio. The computation of the equity beta of the project performed by the Romanian authorities relies on two steps.

(107)

First, the Romanian authorities downloaded the 5-year monthly adjusted equity beta of the comparable companies. As these betas depend on the companies’ respective capital structure, the Romanian authorities adjusted each comparable company’s beta to estimate the so-called unlevered or asset beta (61). The resulting median unlevered or asset beta of comparable companies is [0.2-0.5], with the lower and upper bound being, respectively, [0.2-0.5] (first quartile) and [0.2-0.5] (third quartile).

(108)

Second, the Romanian authorities estimate the equity beta of the project by adjusting the resulting unlevered or asset beta by the median debt-to-equity ratio of the comparable companies of [60-75]% (62). The resulting equity beta of the project is [0.6-0.9], with the lower and upper bound being, respectively, [0.2-0.5] and [0.5-0.8].

(109)

EMRP, the Expected Market Risk Premium (63), is derived from Kroll estimate of 6 %.

(110)

Based on the methodology and parameters presented above, the cost of equity estimated by the Romanian authorities for the project ranges between [8-10]% and [11-13]%, with a base case value of [9-11]%.

(111)

Regarding the cost of debt (Kd) calculation, the Romanian authorities rely on the following formula: Cost of debt = [(1 + CRP) * (1 + Rf) – 1 + CS] * (1-t), Where:   The CRP and Rf are the same as those described above for the cost of equity estimation, namely in recitals (105) and (109).   CS, the credit spread, represents the additional return required by investors over the risk-free rate to finance a company (64) and is estimated by the Romanian authorities as the difference between the yield of EUR bonds for AAA-rated companies in the Utilities sector and the yield of risk-free bonds issued by the German Government, both with 10-year maturity. This is estimated at [0.5-0.8]%.   t, the corporate tax rate, is derived from the marginal corporation tax rate in Romania of 16 %. Romania clarifies that this calculation assumes full utilisation of the tax shield on debt.

(112)

Based on the methodology and parameters presented above, the cost of debt estimated by the Romanian authorities for the project amounts to [4-6.5]%.

(113)

To calculate the WACC of the project, in line with the formula presented in recital (104), the Romanian authorities weight the cost of equity and debt, as described above, by the project’s target gearing (or debt-to-total capital ratio) of [35-45]%. The latter is estimated from the comparable companies’ capital structure (65).

(114)

On the basis of the base value, lower and upper bounds of the cost of equity and cost of debt presented above, as well as the project’s target gearing, the Romanian authorities estimates that total WACC of the project at [7-9]% with the lower and upper bounds at, respectively, [7-9]% and [8-10]%.

5.   DETAILED DESCRIPTION OF THE MEASURES

(115)

Romania submits that the total funding requirement of the project will be financed via a package which includes SNN’s own sources, a grant from the Modernisation Fund, and debt backed by State guarantees issued under market conditions. Furthermore, the project will benefit from direct price support in the form of a two-sided CfD funded by a levy on the energy end-consumers and a change of law protection mechanism during the construction and operation phases.

5.1.   Measure 1: Direct grant

(116)

The Romanian authorities submitted their intention to directly fund the project through a non-reimbursable grant of EUR 600 million (the ‘grant’) from the EU’s Modernisation Fund (66), a dedicated funding program supporting several EU Member States in transitioning to climate neutrality. The grant would be drawn in two equal annual tranches in 2028 and 2029.

(117)

Romania asserts that the grant is crucial to addressing specific market failures and risks related to the extensive refurbishment of the nuclear power plant. The grant will have the role of reducing the pressure on debt financing and contributing to maintaining a sustainable ratio between equity, loans and public support, in line with the principles of proportionality and avoidance of overcompensation. The Romanian authorities explain that the grant is preferable to a loan, even if offered on concessional terms, as a grant enhances the project’s bankability.

(118)

The Romanian authorities explained that the granting of amounts from the Modernisation Fund will be carried out in accordance with the provisions of Emergency Ordinance no. 60/2022, which establishes the institutional and financial framework for the implementation of the Modernisation Fund at national level. According to this regulatory act, nuclear technology is eligible for funding under Key Programme 6 – “Supporting investments in low-carbon energy production capacities”, which expressly includes the development and refurbishment of existing nuclear units, to the extent that it contributes to achieving the decarbonisation objectives assumed by Romania.

(119)

Romanian authorities presented the calculation of the NPV and IRR of the project under various scenarios of aid packages (see section 5.5), both including and excluding the grant alongside the Contract for Difference (CfD).

(120)

If the decision regarding the approval of the envisaged grant from the Modernisation Fund is unfavourable, or the allocated amounts are less than currently outlined, consideration will then be given to loans to replace the grant.

5.2.   Measure 2: State guarantees on loans

(121)

The financing of the construction phase of the project will be based on financing facilities already contracted by SNN or contracted in the future as necessary to cover the financial needs of the project (see below).

(122)

It will include a loan from […] with a value of EUR [40-100] million for the period 2026-2027 intended to finance preliminary works and ensure liquidity during the refurbishment phase. The repayment of the loan is planned in 2027 through a 100 % refinancing by later loans.

(123)

In addition, SNN intends to contract a syndicated loan, or Mandated Lead Arranger credit (‘MLA’), with a value of EUR [300-600] million to finance preliminary works for the project, including capital expenditure related to the engineering, procurement, and construction (EPC) services, as well as owner’s costs and initial operational readiness expenses. Repayments are planned for 2027 and 2028. Specifically, [70-90]% of the MLA loan would be refinanced in 2027, and two equal repayments for [10-20]% of the value are planned in 2027 and 2028.

(124)

SNN also intends to contract commercial loans from the […] Export Credit Agency (‘ECA’) for a value of EUR [1-2] billion for the period 2027-2030 to finance the construction stage of the project. Additionally, the ECA loan would be used to refinance [70-90]% of the MLA loan. The loan is expected to have an [14-19]-year duration, starting after the commissioning date of the unit, with annual repayments scheduled over the post commissioning operational period.

(125)

Romania explained that part of the financing obtained through the ECA loans may be replaced by an EIB loan of EUR [500-900] million which received approval from the EIB Management Committee in November 2025. Romania explains that the approach and premises used in the Financial Model adhere to OECD Consensus guidelines, such as Commercial Interest Reference Rate (‘CIRR’) (67) rates and margins applied over the CIRR Rate (68).

(126)

To access the credit facilities, alongside discussions with potential financiers of the project, SNN signed a Letter of Commitment appointing J.P. Morgan as the Financial Arranger for financing the Unit 1 Project. Because the project's value surpasses SNN’s borrowing capacity, State guarantees will be necessary for the financiers’ benefit.

(127)

Romania therefore explains that the granting of the State guarantee is a critical condition imposed by the Project’s financiers (ECAs), that is expected to favourably influence SNN's financing terms. The Romanian authorities assert that lowering the Project’s financing costs through State guarantees will reduce interest rates and risk premiums, thereby decreasing the strike price of the CfD.

(128)

A Government-approved Memorandum (69) declares that the Romanian State, through its specialised bodies and public administration authorities, will adopt support measures, including legislative measures, to fund the Preparation Phase (Phase 2) and Construction Phase (Phase 3) through State budget allocations and/or State guarantees, provided the budgetary envelope allows. The issuance of the guarantee letter will follow a separate procedure regulated by the legislation governing the approval of procedures for contracting government debt through the issuance of state guarantees. The Ministry of Public Finance is expected to sign the Guarantee Agreement as the guarantor, with the economic operator as the guaranteed party, covering the terms of the guarantee and its monitoring, including the payment of the risk fund commission.

(129)

The Romanian authorities intend to provide State guarantees for all the contracted loans covering 80 % of the principal amounts, as well as the capitalised interest and associated fees incurred during the construction period (70). The drawdown period for these loans will be between 2027 and 2030, during the construction phase of the project.

(130)

According to an assessment note by Exim Banca Românească S.A., SNN’s financial performance falls into credit rating of category A. According to the Romanian authorities, this was determined using economic and financial indicators such as the proportion of outstanding debts to the consolidated general budget, the updated turnover, the equity share in total liabilities, the duration of state-guaranteed loans requested, and other specific indicators. Exim Banca Românească's analysis places SNN in risk class II, which indicates that SNN has very good financial health and repayment capacity. Based on this financial-economic analysis and current legislation on state guarantees, SNN must mitigate financial risks from state-guaranteed loans for the project by paying a fee to the risk fund, according to the risk level determined by Exim. According to the analysis, SNN's fee to the risk fund is [0.5-3] % per annum of the loan guaranteed by the State. Romania considers that this estimation fulfils the conditions for ruling out the existence of aid in individual guarantees as set out in the Commission's Guarantee Notice (71).

5.3.   Measure 3: Two-way Contract for Difference

(131)

The Romanian authorities plan to provide direct price support in the form of a production-based two-way contract for difference to SNN to support the commercial operation of Unit 1 of the Cernavodă Nuclear Power Plant after refurbishment and ensure long-term revenue stability and protect the investment against electricity market price volatility.

(132)

Romania explains that the CfD mechanism will act as a post-investment support measure, applicable throughout the entire commercial operation of the unit of 30 years. The CfD mechanism is planned to start from the commencement of commercial operation of Unit 1 after refurbishment, estimated for 2030, and lasting until 2060. This duration is aligned with the new projected technical life cycle of the unit resulting from the refurbishment. The Romanian authorities consider that this will provide a predictable profitability framework for the operator, avoiding full exposure to price risks and at the same time to ensure a more stable final price for consumers by optimising financing costs and capital structure.

(133)

Under the CfD, SNN as beneficiary will be required to ensure the continuous and safe operation of Unit 1, deliver the electricity produced into the National Power System (SEN) in accordance with applicable regulations, sell the electricity on organised markets, and comply with monitoring, transparency, and reporting obligations established in the CfD contract and the implementing regulation.

(134)

Romania puts forward that the CfD design has been elaborated based on the “safety first” principle, which governs all aspects of nuclear plant operation and takes precedence over commercial or economic consideration. According to Romania, the operation of the NPP is subject to strict technical and regulatory safety standards that significantly constrain operational flexibility, regardless of theoretical load-following capabilities (as per CANDU 6 technology). For these reasons, Romania explains that it has calibrated the CfD design taking into account the physical and safety constraints inherent to nuclear generation.

(135)

Romania has opted for a production-based CfD. Romania explained (see also section 4.4) that, while the plant can reduce output in a pre-planned manner, for example in response to grid balancing needs during periods of reduced consumption (e.g., public holidays), it cannot respond to real-time, ad-hoc price signals in the same way as flexible thermal source. Romania also argues that reductions in output do not generate proportional cost savings, since most operational costs are fixed, and any cycling or modulation may lead to increased maintenance needs and long-term equipment degradation.

(136)

The CfD will compensate the difference between the strike price established ex-ante and the market price of electricity (the reference price of the CfD). The strike price of the CfD will be calculated to ensure that the net present value of the cash flows generated by the investment (NPV) is 0 over the entire life of the unit, facilitating full recovery of capital investments and operating costs, ensuring the sustainability of the project by mitigating the risks associated with market volatility.

(137)

The CfD payments will be managed by OPCOM (72) (the Romanian Power Exchange) as the CfD counterparty, through a Liquidity Fund financed by contributions from electricity end-consumers. In order to establish the annual CfD contribution to be paid by the final consumers to supply the Liquidity Fund, the ANRE methodology will take into account the estimated national energy consumption for the next year, the estimated reference price for the next year of supplying, the estimated strike price for the next year, the estimated sale price of CfD beneficiary for the next year and the Liquidity Fund reserves from the previous year. Romania explains that the CfD contribution mechanism to the Liquidity Fund for the ad-hoc contracts is not yet established by ANRE. However, Romania confirmed that in case the Liquidity Fund would present deficits, these may be ultimately covered by the general State budget.

(138)

The CfD settlement will take place monthly. Romania explained that when the reference price is below the strike price of the CfD, the CfD Counterparty will pay to the beneficiary the settlement calculated by multiplying the electricity quantity delivered by the nuclear reactor to the National Electricity System (‘NES’) and sold on organised electricity markets, and the difference between the strike price and reference price. Conversely, when the reference price exceeds the strike price, it will be the CfD beneficiary who will pay the respective settlement to the CfD counterparty.

(139)

Romania explained that the payment for difference will be made in RON and will reflect the value of the difference between the strike price (calculated in EUR) at the exchange rate on the billing date and the reference price (calculated in RON), multiplies by the measured quantity of power produced.

(140)

The total revenue of the CfD beneficiary will represent the sum of the market revenues and the CfD settlement, as detailed in the formula below. Where:   T I represents the total income of the CfD beneficiary   Pv represents the price corresponding to each transaction notified by the CfD beneficiary   QN represents the quantity of electricity notified for sale for each transaction carried out on the wholesale market   Pstrike represents the strike price of the CfD   Ref p_CfD represents the reference price of the CfD calculated by ANRE based on the organised electricity markets in Romania   QM represents the monthly quantity of electricity produced and measured.

5.3.1.   The reference price of the CfD

(141)

The reference price is the market price benchmark against which the CfD strike price is compared to determine whether payments flow to or from the beneficiary.

(142)

The Romanian authorities explain that the calculation of the reference price will blend two components: a price derived based on SNN’s own commercial transactions and a market index representing the broader Romanian electricity market. The weight given to each component would shift over time, moving gradually from the former toward the latter over the first five years of operation. The reference price will be calculated on a monthly basis.

(143)

The formula for the calculation of the reference price of the CfD is presented below:

(144)

Where:   QID_FW represents the quantity sold by the CfD beneficiary on long-term contracts (one month or longer)   Pm_FW represents the price of long-term contracts (one month or longer)   QID_spot represents the quantity sold by the CfD beneficiary on the spot markets (day-ahead, intraday, or any other market with short-term delivery products, less than one month, including transfers between the producer's portfolios)   PID_spot represents the spot price for the settlement period   QN represents the quantity of electricity notified for sale for each transaction made on the wholesale market and for each ID (settlement interval, currently 15 minutes)   Refp_market_RO represents an annual reference price calculated as the weighted average price of transactions with physical and/or financial delivery, on all organised electricity markets in Romania (except for contracts containing an indexed price and directly negotiated bilateral contracts) of products with baseload delivery in the reference year. For prices expressed in EUR, the exchange rate published by National Bank of Romania (NBR) on the trading day shall be used. Contracts terminated and concluded with the agreement of the parties, and announced and notified in line with the reporting requirements of REMIT, shall be excluded from the calculation of the Reference Price (73). Romania explains that depending on the published market indicator and how it is determined, adjustment coefficients will be applied for products with band delivery annually. Romania further explains that currently this indicator would be the Romanian Power Exchange Forward Market Yearly Index ROPEX_FM_Y which is calculated and published by ANRE on the last business day of year Y-1 for year Y, provided that the volume traded for year Y represents at least 25 % of the estimated consumption of year Y-1, and will be maintained throughout the year. It represents the volume-weighted average price (in €/MWh) of all bilateral electricity contracts with delivery in the specific year Y, traded on the forward markets administered by OPCOM.   QID_DAM represents the quantity sold by the CfD Beneficiary on the day-ahead market.   Refp_DAM represents the day-ahead market price in Romania.   K and L represent calculation coefficients that will respect the condition that K + L = 1.

(145)

As presented in the formula above, the first component of the reference price formula reflects SNN’s own achieved sales prices, calculated as a weighted average across its forward contracts (one month or longer), spot market sales (day-ahead, intraday, and other short-term products), and quantities notified for sale on the wholesale market. This component is weighted by the K coefficient, which starts at 0.9 in the first full year of operation and decrease by 0.2 each year until it reaches zero in year five.

(146)

The second component is a market reference price based on the ROPEX_FM_Y index, an annual forward market indicator calculated and published by OPCOM as a weighted average of transactions on Romanian organised electricity markets. This component is weighted by the L coefficient, which starts at 0.1 in year one and increases by 0.2 each year until it reaches 1 from year five onwards.

(147)

Romania explains that the two coefficients are complementary: K + L = 1 at all times. The transition reflects the intention to ease the plant, which represents approximately 10 % of national consumption, gradually into exposure to a market-based reference CfD price following its return to operation after a prolonged absence.

(148)

The Romanian authorities explain that several corrections will be applied before the Romanian Power Exchange Forward Market Yearly Index (ROPEX_FM_Y) will enter the CfD settlement formula.

(149)

Specifically, for the first five years of operation, Refp_market_RO will be calculated as 0.9 * ROPEX_FM_Y.

(150)

From year six onwards, a factor of 0,85 would be applied to ROPEX_FM_Y. Similarly, from year six onwards, a correction will also apply to the day-ahead market component (ROPEX_DAM_H), which will be multiplied by 0.95, so that Refp_DAM = 0.95 * ROPEX_DAM_H.

(151)

Romania explains that the rationale for this correction is that ROPEX_FM_Y, as a weighted average across all forward market products, captures price levels that a continuous baseload generator such as a nuclear plant cannot fully achieve. The index includes peak products (priced up to 30 % above baseload), seasonal products reflecting winter demand surges of up to 20-26 % above the rest of the year, and high-demand summer periods driven by hydrological conditions. A nuclear plant operating at continuous baseload output cannot arbitrage these higher-value periods in the way that flexible or seasonal generators can. The correction factor is intended to align the market reference with a baseload-equivalent price.

(152)

In order to appropriately reflect the baseload nature of nuclear generation and the partial exposure to the reference market price during the initial operational period, a correction factor of 0.9 has been introduced for the first five years of operation following refurbishment. This factor is intended to align the market reference price with a baseload-equivalent value, ensuring that the CfD mechanism remains both fair and economically viable during the project's early years. The proposed correction factor has been derived based on an analysis of historical market data and projected developments in the Romanian energy market (74).

(153)

Romania explains that the ROPEX_FM_Y index is used for the calculation of the CfD reference price because of its transparency, market-based nature, and suitability for long-term contracting. As a weighted average forward price calculated exclusively from actual transactions and published by OPCOM, it is currently the only aggregated public forward price reference in Romania used for benchmarking medium- and long-term electricity price expectations.

(154)

Romania acknowledges that traded volumes under the index have fallen significantly, from app. 72 TWh in 2018 to app. 18.7 TWh in 2025 but attributes this to temporary, policy-driven distortions, namely retail price caps and government-mandated exports to Moldova, rather than any structural deficiency of the index itself. ROPEX_FM_Y is therefore expected to remain the most representative market-based reference for long-term contracts in Romania.

(155)

In terms of suitability for a CfD, Romania argues that the index is based on actual forward transactions rather than administrative pricing, captures medium- and long-term pricing trends relevant to a baseload producer such as an NPP. Unlike spot prices which are volatile and subject to short-term weather or fuel influences ROPEX_FM_Y reflects a forward-looking price signal better aligned with the long investment cycle of nuclear generation. The index is currently available and will be updated by ANRE to account for other markets where applicable. Therefore, its name in the CfD formula is indicative and subject to change upon adoption of the implementing legislation.

(156)

The Romanian authorities further submit that no CfD payments will be made during periods of negative market prices. This is intended to avoid incentivising overproduction during periods of market surplus, where continued output would exacerbate price depression.

(157)

Furthermore, the Romanian authorities explain that they intend to include PPA contracts into the reference price of the CfD (even though the formula described in recital (142) does not include it at this stage) and commit to organise transparent and non-discriminatory procedures for such PPA contracts (see section 5.3.3).

5.3.2.   Calculation and adjustment of the strike price of the CfD

(158)

The strike price of the CfD will be calculated on the basis of a financial model at a level which ensures that the net present value of the cash flows generated by the investment (NPV) is 0 over the entire life of the unit. The financial model for the project assumes an initial strike price of EUR [80-100]/MWh (real value as of 2027). This price is determined based on the total project costs (CAPEX and OPEX), financing structure, operating lifetime, and the target rate of return of the project (see sections 4.7 and 4.8). In the financial model, the CfD strike price is set using a reverse-engineering mechanism to achieve an ex-ante target IRR of [7-9]%, equal to the WACC, in order to obtain a net present value (NPV) of zero. The CfD mechanism is modelled over the entire lifetime of the Unit.

(159)

The Strike Price is adjusted annually for inflation using the Consumer Price Index (CPI), calculated based on the annual CPI published by Eurostat for the euro area for the preceding calendar year (January 1 – December 31).

(160)

The Romanian authorities presented two scenarios of financing the NPP. In the base case scenario, with a grant of EUR 600 million, the project requires a strike price of [80-100] EUR/MWh to close the funding gap. In the scenario where the beneficiary would not benefit from the EUR 600 million grant, the strike price would rise to [90-110] EUR/MWh.

(161)

The effect of the duration of the CFD on the level of the strike price has also to be studied: assuming a grant of EUR 600 million, a CfD duration of 18 years and aligned on the debt repayment would increase the strike price to [80-100] EUR/MWh. In contrast, extending the CfD durations to 20 years and 25 years would yield strike prices of [80-100] EUR|/MWh. The Romanian authorities argue that these scenarios, while having marginal or no benefit to the end-consumer of electricity, expose the project to various risks that cannot be entirely mitigated, including challenges in adapting to free market conditions and potential price fluctuations after the termination of the CfD, both of which could significantly affect long-term operational and financial stability. Additionally, the Romanian authorities assert that the energy price forecasts incorporated in the financial model exhibit a higher level of uncertainty particularly towards the end of the forecasting period. This uncertainty could adversely impact the project's Internal Rate of Return (IRR) in the absence of a CfD mechanism throughout the project's entire lifespan.

(162)

The Romanian authorities explained that the strike price may be adjusted by agreement of the parties of the CfD contract, with the prior written approval of the Ministry of Energy, on any of the adjustment dates, provided that an adjustment event has occurred. The adjustment dates are 90 days before the Payment Start Date, in the event that the CfD Beneficiary identifies a decrease in the IRR, as well as every 5 years between the 5th and 25th anniversary of the Payment Start Date.

(163)

The adjustment events concern one or more of the following actions that have a cumulative impact on the IRR of the project: (a) An increase in OPEX beyond the inflation-adjusted increase for reasons unrelated to the intent, fault, or negligence of the CfD Beneficiary, and related to factors that could not have been anticipated or foreseen by the CfD Beneficiary at the date of contract signing; (b) Legislative changes, such as decommissioning parameters and tax rates, that affect only the Unit 1 Refurbishment project; (c) Failure to fulfil obligations by the state or state entities; (d) Additional nuclear safety requirements; (e) Natural disasters or similar events.

(164)

Regarding adjustments of the strike price due to a legislative change during the operating period, the Romanian authorities explained that if a legislative change occurs after the CfD contract is signed, once claims have been agreed and/or determined, compensation for the legislative change is paid only if: (a) the legislative change adopted by the state results in an increase in operating costs, in which case compensation is paid by the CfD Counterparty to the CfD Beneficiary as an adjustment to the strike price; (b) if the legislative change results in cost savings for the Beneficiary, the strike price will be adjusted in favour of the CfD counterparty.

(165)

Romania explained that such adjustments will ensure the maintenance of contractual balance and proportionality. If the legislative intervention increases operating costs, the strike price is adjusted upwards within the limits of the new obligations. Conversely, if the legislative change leads to cost reductions, the resulting benefit is passed on to the CfD Counterparty and, indirectly, to consumers, thereby lowering the strike price.

(166)

Romania further confirmed that under the CfD contract, no upward adjustment of the strike price will be permitted in the event that construction costs exceed initial assumptions, except for the cases when such overruns are generated by a change in legislation.

5.3.3.   Electricity sales by SNN

(167)

Romania provided the following information regarding SNN’s market and selling strategy post-refurbishment for Unit 1.

(168)

First, according to Romania, SNN fully commits to transacting at least 80 % of Cernavodă Unit 1’s output via organised markets, both pre- and post-refurbishment. Romania explains that, exceptionally, publicly announced competitive procedures for more specific long-term contracts may be used, particularly in the ramp-up phase after refurbishment. However, SNN will maintain high standards of transparency and competition in its sales process and will contribute to the development of forward market liquidity in Romania, through the introduction of contractual structures suited to long-term baseload generation.

(169)

Second, Romania submits that the NPP will undergo a transitional phase. Upon completion of refurbishment, the plant must first undergo restart procedures and reach full power, after which long-term contracting will begin. Romania argues that, during the initial restart phase, it will be commercially risky to commit to long-term sales before stable operations are confirmed, which may temporarily expose a significant volume of electricity, representing up to 10 % of Romania’s national consumption, to spot markets, which could create price volatility and liquidity challenges (75).

(170)

For this reason, the CfD design will undergo a phased transition. In the first year(s), the reference price would be based on actual sales, ensuring a realistic and risk-aligned benchmark. In subsequent years, exposure would gradually shift toward a broader market reference price, as market stability and long-term contracting improve.

(171)

Third, Romania explains that the electricity generated by Unit 1 of Cernavodă NPP is currently sold exclusively through organised markets, and that this practice is expected to continue following the refurbishment. Historically, 85 % to 90 % of Unit 1 forecasted annual electricity output is transacted via organised forward markets, primarily on OPCOM (the Romanian Power Exchange) and on BRM (Bursa Română de Mărfuri – Romanian Commodities Exchange). These transactions are typically concluded through annual delivery contracts, aligned with long-term production forecasts and tailored contract structures, adapted to planned operational cycles, particularly to accommodate scheduled maintenance or partial outages. This strategic approach enables SNN to maximise the share of output sold under long-term agreements, while minimising reliance on short-term markets (76).

(172)

As regards spot market exposure, Unit 1 of Cernavodă NPP currently maintains a controlled exposure of approximately 10–15% to spot markets (i.e., DAM and IDM). Romania puts forward that this limited spot trading exposure is primarily driven by operational characteristics, such as daily fuel channel uploads, which lead to minor deviations in power output and cannot be perfectly forecasted within longer-term delivery contracts. The spot market strategy is carefully managed to ensure that price volatility risk is minimised, and long-term revenue stability is maintained.

(173)

Following refurbishment and return to full capacity, Romania’s expectation is to maintain the same fundamental sales strategy, prioritising participation in organised, transparent markets and focusing on forward delivery contracts to support predictability and price stability and continued minimisation of spot market exposure, to the extent allowed by market liquidity. However, Romania anticipates a transitional phase immediately after refurbishment, which could lead to a temporary increase in spot market exposure, until long-term contracts are concluded post-commissioning. Indeed, the effective sales launch, scheduled after the refurbishment is finalised and National Grid testing and full synchronisation are successfully concluded, may lead to initial challenges in contracting the entire Unit 1 volume on the forward market.

(174)

To mitigate this risk, SNN plans to offer extended-duration forward contracts on organised markets, subject to the availability of suitable demand. Furthermore, where market conditions or product structures on OPCOM/BRM are not aligned with the plant’s generation profile, SNN will use publicly announced competitive procedures (e.g. published on SNN’s website), ensuring transparent and non-discriminatory allocation criteria. Romania argues that this approach aligns with the principles of market-based participation, while ensuring commercial flexibility to manage the unique operating characteristics of nuclear baseload generation.

(175)

Furthermore, in case of insufficient liquidity on the markets, the Romanian authorities explain that other sales channels have been identified such as long-term bilateral contracts, notably in the form of PPA.

5.3.4.   Overcompensation control mechanisms

(176)

Romania submits that under the CfD contract, a profit-sharing mechanism referred to as the Capital Gain Share (‘CGS’) will be put in place to address situations where the project generates returns above the IRR target of [7-9]%. This mechanism ensures that excess returns are shared between the CfD Beneficiary and the Member State.

(177)

Romania explained that the calculation of the Equity Gain will occur every 5 years starting from the commissioning date of the asset. Each such date is referred to as an ‘CGS Calculation Date’.

(178)

The Capital Gain will comprise any financial returns above the initial IRR of [7-9]%, as derived from actual operational and financial performance compared to the base case assumptions in the financial model.

(179)

The adjustment operates in one direction only. Increases in IRR above [7-9]% trigger an adjustment, while no adjustment is made if returns fall below the target. The strike price will not be increased under any circumstances due to underperformance.

(180)

50 % of the Capital Gain will be allocated to the CfD Counterparty and will be transferred in full to a Liquidity Fund. The remaining 50 % will accrue to the CfD Beneficiary.

(181)

Romania explained that the CGS will be implemented through a strike price adjustment, determined by re-running the financial model using the updated assumptions reflected in the CGS report or as recommended by the cost consultants. Gains above the target IRR realised before the CGS calculation date are, at 50 %, shared via retrospective payments from the CfD Beneficiary to the Liquidity Fund.

(182)

Furthermore, a construction phase gain sharing mechanism will also apply, ensuring that if the actual amounts spent on construction are lower than the amounts initially estimated in the financial model, the cost difference will be shared between the beneficiary and the CfD counterparty, reducing the strike price of the CfD. The Romanian authorities explain that the construction gain sharing will only work in one direction, meaning that the strike price will not increase if construction costs are higher than initially estimated, except for cost increases generated by legislative or policy changes (see Measure 4 for more details).

5.4.   Measure 4: Legislative protection mechanism during construction and operation phase

(183)

Romania also proposes to set up a protection mechanism against policy or legislative changes that could negatively affect the project during the construction and post-refurbishment operating period to ensure the economic and financial viability of the project and to enable the necessary financing in a context marked by systemic risks and legislative uncertainty.

(184)

Romania explains that the envisaged protection mechanism against possible political and/or legislative changes addresses risks from potential future State actions that may jeopardise the project and draws on similar examples from the European Commission’s case practice in nuclear energy investments. The measure is designed to ensure investment framework predictability, allow balanced allocation of risks between the parties, and help reduce the total amount of state aid required by lowering perceived risk for financiers.

(185)

Romania considers that the mechanism respects the principles of proportionality and efficient risk allocation, clearly establishing that operational, commercial, and project management risks (delays, budget overruns, technical non-compliances) remain exclusively the responsibility of the beneficiary. The State will intervene only in exceptional situations, not attributable to the operator, that fundamentally affect the overall framework for project implementation.

(186)

The mechanism consists of financial protection granted to SNN if, during the implementation of the project or during the operation phase, the Romanian State decides to change its nuclear policy, resulting in the permanent or temporary shutdown of construction or operation of Unit 1 (the ‘trigger event’). A change in nuclear policy or strategy is understood as the adoption of new legislation or amendment of existing legislation at the national level, for reasons other than those deriving from EU law, the TFEU, EURATOM, IAEA requirements, or international treaties to which Romania is a party, which leads to the permanent shutdown of the unit or temporary suspension for a defined period of its construction or operation over the 30-year operating period. This mechanism also covers shutdowns due to the non-granting of a state guarantee and/or the non-signing or invalidation of the CfD for reasons unrelated to SNN. A temporary shutdown is defined as any stoppage longer than the period stipulated in financing contracts for triggering the default determination mechanism for loans.

(187)

This mechanism provides SNN with financial protection if risks beyond its control occur during the project's implementation, resulting in permanent or temporary disruptions to the construction or operation of the nuclear unit. These risks include: (a) Romania changing its nuclear policy; (b) the State guarantee for bank loans not being granted for reasons unrelated to SNN; and (c) the failure to sign, invalidation, or non-implementation of the CfD due to public authorities’ failure to fulfil their obligations.

(188)

In the event of a national nuclear policy or strategy change resulting in the permanent or temporary shutdown of construction or operation of Unit 1, the recovery of SNN’s costs will be carried out as follows.

(189)

In the event of a permanent shutdown during the construction period, SNN will be allowed to recover its investment costs incurred up to the moment of permanent shutdown, as well as costs arising from the permanent shutdown (including any costs payable in case of shutdown before completion) and any outstanding loan amounts and financing costs to be repaid by SNN (not covered by the state guarantee, if granted at the time of shutdown).

(190)

In the event of a temporary shutdown during the construction period, SNN will be allowed to recover its costs arising from the temporary stoppage of construction (mobilisation/demobilisation of resources, temporary storage of equipment, etc.), including any costs payable in case of temporary shutdowns and any outstanding loan amounts or financing costs to be repaid by SNN during the temporary stoppage (not covered by the state guarantee, if granted at the time of shutdown), as applicable.

(191)

In the event of a permanent shutdown during operation period, SNN will be allowed to recover the investment costs that have not yet been recovered through operation up to the moment of permanent shutdown, as well as any costs payable in case of halted electricity delivery and any outstanding loan amounts and financing costs to be repaid (not covered by the state guarantee).

(192)

In the event of a temporary shutdown during operation, SNN will be allowed to recover costs arising from the temporary stoppage of operation (costs for equipment preservation, personnel costs, unrealised benefits, etc.), any costs payable in case of halted electricity delivery, and any loan repayments due under the financing contract clauses.

(193)

Furthermore, as of November 2025, the CfD contract provides that, during the Cernavodă Unit 1 operation phase, SNN shall benefit from full protection in case of cost increases due to a change of law event as defined therein. In case of a change of law event resulting in a cost decrease, such decrease shall be passed to the CfD Counterparty, in both cases via an adjustment to the strike price.

(194)

The current CfD draft defines a change of law as any post-signing date alteration in Romanian law or permits affecting: (a) Cernavodă Unit 1; (b) SNN regarding Cernavodă Unit 1; (c) any nuclear power installation under a CfD Contract; or (d) SNN shareholders regarding Cernavodă Unit 1, which either triggers change-of-law costs/savings, prevents SNN from meeting conditions precedent or reduces production during the CfD contract term (77).

(195)

Romania explains that this measure will be implemented through legislative act, forming the legal basis for a contract between SNN and the Romanian State which will set out the conditions for activating protection clauses, the methodology for assessing and compensating the incurred costs, and the procedure for verifying the causes and the eligible amounts for compensation.

5.5.   Alternative scenarios

(196)

Romania provided a scenario analysis for the refurbishment of Unit 1 of the Cernavodă Nuclear Power Plant to assess whether the project would proceed in the absence of State aid, or under partial aid configurations as described below.

(197)

Under a first scenario (Scenario A), the project receives no State aid and financing relies entirely on commercial and ECA loans alongside SNN equity, all at market rates, with no grant or Contract for Difference (CfD) mechanism in place. The purpose is to establish whether the project could be delivered under pure market conditions, without public support. In this scenario, the Romanian authorities estimate that the project would have a higher cost of capital and would encounter limited risk appetite among lenders and investors which render the financing structure unviable. Without predictable revenue streams, neither lenders nor equity investors are willing to absorb the long-term risks inherent to the project. The results in a negative NPV and an IRR of [7-9]%, well below the project's WACC. The Romanian authorities conclude that, as no financial institution or investor would be willing to assume the risk without state-backed de-risking, the project is not viable in the absence of State aid. Scenario A thus confirms that public support is a necessary condition for the project's financial viability.

(198)

Under a second scenario (Scenario B), the project receives a grant of EUR 600 million but no revenue support. No CfD mechanism is implemented, leading to a full exposure to electricity market prices. This scenario evaluates whether a capital subsidy alone could make the project viable, by reducing up-front investment needs. In this scenario, the Romanian authorities submit that, while the grant improves the capital structure, the absence of a revenue stabilisation mechanism fully exposes the project to long-term electricity price volatility, increasing the difficulty and cost of securing financing, as the resulting forecasted cash flows remain too uncertain to support project financing. Romania puts forward that, as debt providers are unwilling to commit in the absence of predictable revenues, the grant alone is insufficient to unlock the investment. The Romanian authorities conclude that the CfD mechanism is essential to mitigate revenue risk and make the project bankable.

(199)

A third scenario (Scenario C) entails the granting of a CfD, but not of the direct grant. In this scenario, a 30-year CfD mechanism is implemented, stabilising SNN’s revenues during the operational phase. All investment costs are covered by SNN equity and loans. This scenario aims to test whether revenue stability alone can ensure project bankability, and whether the capital grant can be excluded without undermining the project’s financial viability. In this scenario, the Romanian authorities identify that, although the CfD mechanism ensures sufficient revenue predictability to enable long-term financing, in the absence of the EUR 600 million grant, the financing costs increase, and the required strike price increases significantly in order to maintain the target IRR ([7-9]%). A higher strike price directly results in larger CfD payments during the operation period, which translates into a higher financial burden on the final consumers. Romania concludes that, although the project may still be technically viable under this scenario, the lack of a grant leads to a less efficient aid structure with higher consumer cost transfer and a higher total amount of aid.

(200)

The Romanian authorities provided the financial modelling of the analysed counterfactual scenarios, summarised in Table 6 below: Table 6 Scenarios of NPV calculations Scenario Project IRR NPV Conclusion Market-based (no aid) [7 -9 ]% Strongly negative Not bankable – revenue volatility too high Grant only (no CfD) [7 -9 ]% Positive Not bankable – revenue volatility too high CfD only (no grant) [7 -9 ]% Strongly negative Not viable, requires a higher strike price, and leads to higher costs for consumers With grant and CfD [7 -9 ]% 0 Viable and balanced, no overcompensation through state-aid

5.6.   National legal basis and granting authority

(201)

Romania submits that the national legal basis for the State aid package will be an Emergency Ordinance, issued after the approval of the aid, which will establish the legal framework for granting of the support measures for the project.

(202)

The granting authority for Measure 1, 3 and 4 will be the Ministry of Energy, while Measure 2 will be granted by the Ministry of Finance.

6.   ASSESSMENT OF THE MEASURE

6.1.   Existence of aid

(203)

According to Article 107(1) TFEU, any aid granted by a Member State or through State resources, in any form whatsoever, that distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods, is incompatible with the internal market, in so far as it affects trade between Member States.

(204)

A measure constitutes State aid within the meaning of Article 107(1) TFEU, if it fulfils four cumulative conditions. First, the measure must be imputable to the State and funded through State resources. Second, the measure must confer an advantage to a beneficiary. Third, the measure must favour certain undertakings or economic activities (i.e. there must be a degree of selectivity). Fourth, the measure must have the potential to affect trade between Member States and to distort competition in the internal market.

6.1.1.   A single intervention comprising several measures

(205)

Different State aid measures can be considered as a ‘single intervention’. (78) This is the case where consecutive interventions are so closely linked to each other, especially having regard to their chronology, their purpose and the circumstances of the undertaking at the time of those interventions, that they are inseparable (79). For instance, a series of State interventions which take place in relation to the same undertaking in a relatively short period of time, are linked to each other, or were all planned or foreseeable at the time of the first intervention, may be assessed as one intervention.

(206)

In the present case, first, the Commission considers that all four notified measures have the same subject matter and objective, namely, to enable the refurbishment and lifetime extension of Unit 1 at the Cernavoda NPP. Further, the measures coincide chronologically, as they were planned (and were thus foreseeable when negotiated) together (80). The national legal basis for all measures will be an Emergency Governmental Ordinance, issued after the approval of the aid (see recital (200)). Measure 1, 3, and 4 will be granted by the Ministry of Energy while Measure 2 will be granted by the Ministry of Finance.

(207)

Second, all the measures were negotiated together and are designed in a way that each measure has a direct impact on the others. The measures jointly create the financial preconditions that enable the refurbishment and lifetime extension of Unit 1. For example, lowering initial capital requirements through Measure 1 (the grant), lowering the capital costs through Measure 2 (the guarantee), and lowering the political and policy risks through Measure 4 impact the amount of aid needed under Measure 3 (the CfD). Measure 4 (the legislative protection mechanism) and Measure 3 (the CfD) address the risks linked to long-term exposure to political decisions and market fluctuations, which Measure 1 (the direct grant) and Measure 2 (the guarantees) cannot address alone. In conclusion, the four measures at issue are closely linked and it would be impossible to separate them.

(208)

The Commission further notes that SNN has made a considerable financial investment in the development phase of the project. As Romania explains (see recitals (63) to (66)), the first sub-phase of that development was conducted on a purely commercial basis, without any expectation that the project would receive State aid. This changed after the Government Memorandum of October 2024 was approved, after which SNN's continued investment was premised on the expectation of State support, without which the project could no longer be economically viable in light of the estimated cost increases. The Commission therefore considers that the Memorandum marks the point at which the pre-project expenditure can no longer be considered severable from a single State intervention but instead can be considered as forming part of it.

(209)

The Commission considers therefore that the four measures, as well as the contribution provided by SNN to finance the development phase of the project after the Government memorandum approving State aid to the project should be examined together as a single intervention, as they are interdependent and have mutually enhancing effects for the performance of the project.

(210)

The Romanian authorities do not dispute the conclusion that the measures, together with SNN’s contribution to finance the development phase of the project, after the Government memorandum approving State aid to the project, are inseparable and constitute a single intervention.

6.1.2.   Imputability to the State and financing through State resources

(211)

For measures to be capable of being categorised as aid within the meaning of Article 107 TFEU, they must be granted directly or indirectly through State resources. It is established case-law (81) that measures financed through compulsory charges imposed by the legislation of the Member State, managed and apportioned in accordance with the provisions of that legislation, may be regarded as State resources within the meaning of Article 107(1) TFEU even if they are managed by private or public entities separate from the public authorities. This means that both advantages which are granted directly by the State and those granted by a public or private body designated or established by the State are included in the concept of State resources within the meaning of Article 107(1) TFEU.

(212)

Furthermore, it is not necessary to establish, in all cases, that there has been a transfer of State resources in order to assess the measure as State aid within the meaning of Article 107(1) TFEU (82).

(213)

The aid package for this project has been decided by the Romanian State and will be set out in an Emergency Governmental Ordinance, issued after the approval of the aid, which will establish the legal framework for granting of the support measures for the project (see recital (200)). The granting authority for Measures 1, 3 and 4 will be the Ministry of Energy, while Measure 2 will be granted by the Ministry of Finance (see recital (201)).

(214)

All measures that form part of the single intervention are financed from resources under the control of the State. Measure 1, if approved, will be financed from funds of the Modernisation Fund are allocated to Romania and implemented by the Romanian national authorities, in this case the Ministry of Energy. Measure 2 will be provided by the Ministry of Finance, following procedures for contracting government debt through the issuance of state guarantees regulated by national law. The guarantee entails a concrete risk for the State budget, which will be burdened in case the guarantee is triggered. Measure 3 will be financed from a levy added to the bills of electricity consumers set annually by the ANRE (see recital (136)). The CfD payments will be managed by OPCOM, a subsidiary of the TSO Transelectrica, which is 100 % State-owned. OPCOM is therefore effectively controlled by the Romanian State via Transelectrica. Measure 4 provides the possibility of cost recovery, financed from the State budget, in case of policies or legislative changes that negatively affect the project and will be implemented via a contract between SNN and the State which will set out the conditions for activating protection clauses. Finally, the strategy for the refurbishment project and the financing from SNN resources of the development phase of the project by SNN was approved by SNN’s Board of Directors and its shareholders, where the Romanian State via the Ministry of Energy owns a majority stake if 82,49 % (see recital (51)).

(215)

The Commission therefore considers that the financing of the measures comprised in the single intervention is or will be controlled by the State and that all the measures that form part of the Single intervention are imputable to the State.

(216)

In the light of the above, the Commission considers that the measures are granted through State resources and are imputable to the State within the meaning of Article 107(1) TFEU.

6.1.3.   Selective economic advantage

(217)

A measure is deemed selective if it favours only certain undertakings or the production of certain goods. An advantage, within the meaning of Article 107(1) TFEU, is any economic benefit, which an undertaking would not have obtained under normal market conditions, i.e., in the absence of State intervention. (83)

(218)

The specific measures described in sections 5.1 to 5.4, as well as SNN’s financial resources used to finance the development phase of the project, target selectively the project, namely the refurbishment and life extension of Unit 1 of the Cernavoda NPP. The single intervention benefits SNN, thereby favouring it as compared to other undertakings in the energy sector.

(219)

All the measures that form part of the single intervention, taken as a whole, allow the project to be realised and provide for a target return of investment (see Section 4.8). As argued by the Romanian authorities, the measures aim to enable an investment that, due to the specific risks and the long project duration, would not have been undertaken by a private investor under normal market conditions, that is to say in the absence of State intervention (see recitals (41) to (49)). The Commission agrees with this assessment, as detailed in section 6.2.1.2 Hence, the single intervention comprising the measures described in sections 5.1 to 5.4 and the financing provided by SNN for the development phase of the project, confers a selective economic advantage to the beneficiary of the project within the meaning of Article 107(1) TFEU.

(220)

As to the measures described in sections 5.1, 5.3, and 5.4, they also, even if taken separately, clearly confer an economic advantage to the beneficiary. Measure 1 provides a non-reimbursable grant of EUR 600 million to finance the project, which is not available for other operators in the market. Measure 3 provides a stable long-term remuneration for the electricity produced by the refurbished unit that would not, at least not for such a duration, be available on the market, ensuring a steady flow of revenues for SNN that other operators not benefitting from a similar support measure do not receive. Measure 4 provides financial protection in case of change of law or policy, thereby reducing the investment risk and transferring it to the State, thus conferring an economic benefit that could not have been obtained under normal market conditions.

(221)

The Commission notes that Measure 2 provides guarantees at a [0.5-3]% premium covering 80 % of the debt raised by SNN to finance the project and associated obligations, while also reducing the project’s risk and transferring it to the State. The Romanian authorities claim that the guarantees are granted on market terms, in line with the conditions for ruling out the existence of aid in individual guarantees as set out in the Commission’s Guarantee Notice (see recital (129)). At this stage, the Commission does not have sufficient information to take a definitive view on this claim and cannot exclude that Measure 2 entails an economic advantage to SNN. In particular, it is not clear whether the established guarantee fee takes into account, in an appropriate manner, the risk profile relevant to the operation it covers, the guaranteed undertaking (SNN), and the collaterals provided. The Commission considers it unlikely that a market operator could be in a position to adequately price such a guarantee, given the uniqueness of the investment. Finally, the Commission considers that, since Measure 2 forms part of a single State aid intervention and it cannot be severed from the other measures that form part of the aid package, it is immaterial for the purposes of this State aid examination whether all the cumulative criteria listed in Article 107(1) TFEU, including the selective advantage, are met separately for Measure 2 (84).

(222)

The Commission considers that the financial contribution by SNN to the development phase of the project also provides an economic advantage as a private investor acting under the market economy operator principle would only agree to finance costly and preparatory works for a nuclear project if it expects adequate remuneration for the risks taken or if it receives contractual protection against losses. In the case at hand, the adequate remuneration for the risks taken and the protection against losses is intended to be provided by the State through the aid package.

(223)

Therefore, the Commission concludes that the measures that compose the single intervention under discussion confer a selective economic advantage to SNN.

6.1.4.   Threat of distortion of competition and trade

(224)

The electricity market has been liberalised, and electricity producers are engaged in trade between Member States, so that an advantage granted to the producers of nuclear electricity is likely to distort competition and affect trade between Member States. Electricity from nuclear sources is generally sold on the internal market for electricity, where it enters in competition with all sources of electricity, including those in other Member States.

(225)

Therefore, the advantage granted to the beneficiaries of the single intervention is likely to distort competition and affect trade between Member States.

6.1.5.   Conclusion on the existence of aid

(226)

On the basis of the above-mentioned elements, the Commission considers that the single intervention constitutes State aid within the meaning of Article 107(1) TFEU.

6.2.   Compatibility of the measures with Article 107(3)(c) TFEU

(227)

Article 107(3)(c) TFEU provides that the Commission may declare compatible ‘aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest’. Therefore, compatible aid under that provision of the Treaty must contribute to the development of certain economic activity. Furthermore, the aid should not distort competition in a way contrary to the common interest. The Commission must thus verify: (a) Whether the aid measure facilitates the development of an economic activity by: — identifying the economic activity supported by the aid; and — showing that the aid effectively facilitates the development of the economic activity, — without that activity breaching any relevant Union rules. (b) Whether the aid measure does not unduly affect trading conditions to an extent contrary to the common interest by: — identifying the market(s) affected by the aid; — identifying the positive effects of the aid measure on the internal market; — assessing how the aid measure minimises the distortions on competition and trade by evaluating the necessity of the aid, its appropriateness and its proportionality; — identifying the outstanding distortions of trading conditions that cannot be avoided (despite the aid being necessary, appropriate, proportionate); and (c) Weighing up the positive effects of the aid with the negative effects on competition and trade in the internal market.

6.2.1.   Positive condition: development of an economic activity

(228)

Under Article 107(3)(c) TFEU, the measure must contribute to the development of certain economic activity.

6.2.1.1.   Contribution to the development of an economic activity

(229)

As mentioned in recital (57), the objective of the measures subject to this decision is to enable investment in the refurbishment, modernisation, and lifetime extension of the Unit 1 of Cernavoda NPP and to enhance its operational safety, thereby contributing to the decarbonisation of the electricity system in Romania and to the security of electricity supply. Specifically, the support provided by the State targets directly major upgrades of the essential infrastructure of the NPP.

(230)

The Court of Justice has recognised the development of new nuclear capacity as an economic activity in the sense of Article 107(3)(c) TFEU (85) and has established that Article 107 TFEU may be applied to investments in nuclear power stations (86). The Commission considers that the same applies for investments for NPP lifetime extensions. Indeed, without the lifetime extension, Cernavoda’s Unit 1 would have to be decommissioned and the economic activity of generating electricity from that facility would cease entirely.

(231)

The Commission therefore considers that the project facilitates the development of certain economic activities, namely by preserving and prolonging the generation of nuclear-based energy, as required by Article 107(3)(c) TFEU.

6.2.1.2.   Incentive effect

(232)

State aid can only be considered to facilitate an economic activity if it has an incentive effect. An incentive effect occurs when the aid induces the beneficiary to change its behaviour towards the development of the economic activity pursued by the aid, and if this change in behaviour would not otherwise occur without the aid.

(233)

Romania has explained that, in the absence of aid, SNN would not have the necessary incentives or means to invest in the project. The project’s high investment costs exceed the financial and borrowing capacity of the beneficiary and the project entails significant market risks which cannot be managed through market mechanisms alone. Furthermore, the market is characterised by high volatility and the longevity of exposure to policy and legislative changes which make the project very risky without State intervention.

(234)

The Commission agrees that the project would not be implemented absent State support in view of the current uncertain and fast-changing market conditions and the market failures associated with nuclear power development (i.e., scale of the capital requirement, longevity of exposure to market pricing signals, and longevity of exposure to political decisions). Given the significant risks inherent in nuclear projects, the Commission recognises that investors would not be willing to consider long-term investments of such magnitude without derisking support, protection from market risks or against policy and legislative changes, though the exact extent of protection necessary requires careful analysis.

(235)

The Commission further accepts that without the aid the funding gap of the project would not be closed. The Romanian authorities have estimated that, in the absence of the aid, the NPV of the project would be strongly negative and the project IRR would be [7-9]% which appears to be insufficient to justify an investment decision by SNN (see recital (196)). This is due to size of the capital investment required and the higher financing costs the project would likely incur in the absence of the support measures. Additionally, it is credible that debt providers would be unwilling to commit to finance the project in the absence of predictable revenues (see recital (197)).Finally, without State intervention, the investor would need to bear significant additional risks that are otherwise mitigated by the support measures, such as the market price risk and the policy risk, which suggest that the investor would expect a comparatively higher return to implement the project without aid.

(236)

The Commission therefore considers preliminarily that aid for the project has an incentive effect as it induces the beneficiary to engage in economic activity it would not carry out without the aid.

6.2.1.3.   Compliance with relevant provisions of EU law

6.2.1.3.1.   Introduction

(237)

The Court of Justice has consistently held that ‘State aid which contravenes provisions or general principles of EU law cannot be declared compatible with the internal market’ (87) . According to settled case law, ‘when the Commission applies the State aid procedure, it is required, in accordance with the general scheme of the Treaty, to ensure that provisions governing State aid are applied consistently with specific provisions other than those relating to State aid and, therefore, to assess the compatibility of the aid in question with those specific provisions. However, such an obligation is imposed on the Commission only where the aspects of aid are so inextricably linked to the object of the aid that it is impossible to evaluate them separately. The obligation is not imposed, however, where the conditions or factors of an aid scheme, even though they form part of the aid, may be regarded as not being necessary for the attainment of its object or for its proper functioning’ (88).

(238)

The Court of Justice summarised in its judgment in the Paks II case the circumstances in which the Commission must consider other provisions of EU law in its State aid assessment. Specifically, ‘the Commission must take into account infringements of provisions of EU law other that those related to State aid where such infringement arises from the economic activity financed, from the aid or from its object as such or from aspects inextricably linked to the object of the aid. Thus, where the modalities of an aid measure are so indissolubly linked to its object that it is impossible to evaluate them separately, their effect on the compatibility or incompatibility of that aid viewed as a whole must therefore of necessity be determined in the framework of the procedure prescribed in Article 108 TFEU. Such modalities are therefore among the factors which the Commission is required to examine and, as the case may be, to approve […]’ (89).

6.2.1.3.2.   Compliance with EU environmental law and Euratom Treaty requirements

(239)

As explained in recital (237), State aid that supports an activity that breaches EU environmental rules cannot be found compatible with the internal market. For nuclear energy specifically, the Court of Justice clarified that for the sector ‘covered by the Euratom Treaty, State aid for an economic activity falling within that sector that is shown upon examination to contravene rules of EU law on the environment cannot be declared compatible with the internal market pursuant to that provision’ (90).

(240)

The Court of Justice also clarified that the provisions of the TFEU as well as EU environmental law, including the principle of protection of the environment, the precautionary principle, the ‘polluter pays’ principle and the principle of sustainability cannot be regarded as precluding, in all circumstances, the grant of State aid for the construction or operation of a nuclear power plant (91). That reasoning is fully applicable to the project and the measures at stake, even though it concerns a lifetime extension and not nuclear newbuild. This is all the more the case since Romania has opted for nuclear energy, inter alia, to decarbonise its energy sector.

(241)

The Court of Justice also highlighted that the requirement to subject certain projects to an environmental assessment, set in EU secondary legislation (92), applies to nuclear power stations and other nuclear reactors (93). In this respect, the Romanian authorities specified that the project development was preceded by an extensive and open environmental impact assessment process conducted in compliance with EU secondary legislation requirements (see recital (66)).

(242)

At this stage, the Commission has no indications that the project may violate provisions of EU environmental law.

(243)

The Romanian authorities further explained that the project has been notified to the Commission pursuant to Article 41 of the Euratom Treaty (94).

6.2.1.3.3.   Compliance with public procurement rules

(244)

The Commission must take into account possible infringements of provisions of EU law other than those governing State aid where such possible infringements arise from aspects inextricably linked to the object of the aid. In other words, the Commission must examine, within the State aid procedure, ‘the indissociable aspects of the object of the aid, that is to say, the modalities which are so indissolubly linked to its object that it is impossible to evaluate them separately’ (95).

(245)

In the Paks II judgment, the Court of Justice held that, in that case, ‘the direct award of the contract for the construction of the two new nuclear reactors [was] an aspect that [was] inextricably linked to the object of the aid measure’ (96) and clarified that an inextricable link exists when ‘an aspect consisting in that award is indispensable for the attainment of the objective of the aid’ (97) . ‘By contrast, aspects which, although forming part of the aid measure at issue, are not specifically necessary for the attainment of its objective or for its functioning are not aspects that are inextricably linked to the object of the aid.’ (98)

(246)

In light of the Paks II judgment, the Commission examines below whether the direct award of the EPC contract to the Consortium is an aspect inextricably linked to the object of the notified aid, such that an assessment of its compliance with EU public procurement rules would have to be included in the present decision.

(247)

In the present case, the Commission considers that the object of the aid is to support the refurbishment and operation of Unit 1 of the Cernavoda NPP through an aid package that includes a grant, State guarantees, a CfD and a protection mechanism for the benefit of SNN.

(248)

The Commission notes that the notification does not indicate that the granting of the aid is contingent upon either the identity of the EPC contractor or the direct award of the EPC contract. Nevertheless, Romania claims (as explained in section 4.3) that the Consortium is the sole holder of the know-how and intellectual property rights required for the refurbishment and that the EPC contract can only be awarded to the Consortium. In this context, and without prejudging the existence of an inextricable link between the procurement and the object of the aid, the Commission considers it is prudent to examine whether the negotiated procedure without prior call for competition is consistent with EU public procurement rules.

(249)

As regards public procurement requirements, the Romanian authorities submit that, following a prior dialogue with the relevant services of the Commission, the contract for the refurbishment of Unit 1 of the Cernavoda Nuclear Power Plant (the Project) was awarded by using a negotiated procedure without prior call for competition in accordance with art. 117(1)(c) read together with Article 117(2)(b)-(c) and (4) of the Romanian Law No 99 99/2016 on sectoral procurement, provisions which transpose Article 50, (c), points (ii) and (iii) of Directive 2014/25. The latter provisions allow contracting entities to use a negotiated procedure without prior call for competition “where the works, supplies or services may be provided only by a particular economic operator” because of “the absence of competition for technical reasons” (point (ii)) and/or “the need to protect exclusive rights, including intellectual property rights” (point (iii)). The last sentence of Article 50, (c), adds that the two exceptions just quoted “shall only apply when no reasonable alternative or substitute exists and the absence of competition is not the result of an artificial narrowing down of the parameters of the procurement”.

(250)

Romania stressed that the Unit 1 of the Cernavodă Nuclear Power Plant in Romania is already built and operational using the CANDU-6 technology and that therefore the project can only be completed by using the CANDU-6 technology.

(251)

Given the complexity of the activities linked to the refurbishment of the already existing Unit 1, which requires the use of the specific technical expertise of the original designers of Cernavoda NPP, SNN conducted the negotiations with Candu Energy Inc. - as the legal successor of the Original Designer manufacturer of the nuclear systems of Unit 1 and Ansaldo Nucleare S.p.A, - as the Original Designer of the Balance of Plant Systems of Units 1 and 2. Both companies hold together the exclusive right to commercialise the intellectual property embedded in the CANDU-6 Intellectual Property and the Balance of Plant Intellectual Property. The IP owned by Candu and Ansaldo is critical and indispensable for the execution of the Project.

(252)

Romania explained that considering that the implementation of the refurbishment project involves the execution of certain categories of construction-assembly works, respectively civil construction works, which are not part of the scope of activity of Candu Energy Inc. and/or Ansaldo Nucleare S.p.A., the two original designers formed a partnership with Korea Hydro & Nuclear Power Co., Ltd (KHNP) formalised under the Consortium Agreement. The collaboration between the 3 companies is based on the availability of the original designers to provide KHNP all the necessary documents and information, including confidential and/or intellectual property rights-protected information, for the purpose of implementing the Cernavoda NPP Unit 1 Refurbishment Project. The association was also joined by Canadian Commercial Corporation (CCC), a Crown corporation wholly owned by the Government of Canada providing organisations such as SNN with the assurance that the contract will be performed as agreed to by the parties (by providing the guarantee of the Government of Canada).

(253)

Given the arguments presented by Romania in section 4.3 and, in particular, the technological exclusivity held by Candu Energy and Inc. Ansaldo Nucleare S.p.A and their exclusive right to commercialise the intellectual property embedded in the CANDU-6 Intellectual Property and the Balance of Plant Intellectual Property, the Commission considers that the recourse to a negotiated procedure without prior call for competition was justified in light of the conditions set out in Article 50, c), points (ii) and/or (iii) of Directive 2014/25/EU And transposed in Romanian law.

(254)

The Commission therefore concludes that no doubts arise about the compliance of the Project with the EU procurement law.

6.2.1.3.4.   Compliance with Articles 30 and 110 TFEU

(255)

In the field of energy, any levy that has the aim of financing a State aid measure and forms an integral part of that measure needs to comply, in particular, with Articles 30 and 110 TFEU (99).

(256)

According to settled case law, for a levy to be regarded as forming an integral part of an aid measure, it must be hypothecated to the aid under the relevant national rules, in the sense that the revenue from the charge is necessarily allocated for the financing of the aid and has a direct impact on the amount of the aid, and, consequently, on the assessment of the compatibility of that aid with the common market. (100) In particular, the concerned charge must be levied specifically and solely for the purpose of financing the aid at issue. (101)

(257)

In the present case, in case the strike price of the two-way CfD is above the market prices of electricity, measure 3 will be financed through a levy on electricity consumers (see section 5.3.2). However, such a levy is not hypothecated to the aid and does not form an integral part of the aid measure.

(258)

First, Romania confirmed that while a levy may contribute to the financing of measure 3, such a financing will not depend on the levy, and the general State budget will cover any costs not covered by the levy. (102)

(259)

Second, and as a consequence, the possible introduction of a levy in connection with the financing of the CfD will not have a direct impact on the amount of the aid. (103).

(260)

Therefore, the levy in question does not form an integral part of the measure and its compliance with Articles 30 and 110 TFEU is not assessed in the present decision.

6.2.1.3.5.   Compliance with energy law provisions

(261)

As explained in recital (237), the Commission must take into account possible infringements of provisions of EU law other that those related to State aid where those infringements may arise from the aid measure itself or from its very object. It is therefore necessary to assess the compliance of Measure 3, i.e. the two-way CfD with the relevant provisions of EU law.

(262)

The requirements set in Article 19d(2) of the Electricity Regulation apply to all two-way CfDs, regardless whether they are mandatory under Article 19d(1) of the Electricity Regulation (104) or voluntarily introduced by a Member State. Hence, these requirements apply to newly introduced two-way CfDs in relation to investments aiming to incentivise the lifetime extension of a nuclear asset, as in the present case. The Commission considers that the Romanian authorities have not demonstrated compliance with the design principles in Article 19d(2) of the Electricity Regulation, as explained in more details in section 6.2.2.6.1.

(263)

Romania also did not explain in the notification what would happen with proceeds from the CfD that flow back to the State. Without this information, the Commission cannot assess whether the measure is in compliance with the principles set out in Article 19d(2), point (d) and (e) of the Electricity Regulation and therefore raises doubts about it.

(264)

As explained above, the Commission cannot confirm, at this stage, that the design of two-way CfD, as proposed by the Romanian authorities, complies with the design principles set out in Article 19d(2) of the Electricity Regulation. Therefore, the Commission has doubts that the proposed measures do not infringe relevant provisions of EU law.

6.2.1.4.   Conclusion

(265)

For the reasons explained in section 6.2.1.3, the Commission cannot conclude, at this stage, that the project fulfils the first (positive) condition of the compatibility assessment i.e. that the aid facilitates the development of an economic activity without breaching relevant Union rules.

6.2.2.   Negative condition: the aid cannot unduly affect trading conditions to an extent contrary to the common interest

6.2.2.1.   Identification of the market affected by the aid

(266)

The measures were designed to help decarbonise Romania’s energy system and address concerns regarding grid stability and security of supply (see Section 2.1.4). At the same time, it has been established that the Romanian market is relatively well interconnected with its neighbours with an interconnection capacity of approximately 4 500 MW which should be improved in order to reach a 21 % interconnection level by 2030 (see recital (11)). The aided investment concerns the lifetime extension of a nuclear reactor, which will produce electricity for supply into the national and interconnected European electricity market.

(267)

The aid therefore affects primarily the market for electricity generation and wholesale supply, irrespective of the underlying generation technology. In addition to the primary wholesale electricity market, the investment may affect related markets such as the balancing and ancillary services market, where the NPP may provide services. However, these secondary markets are complementary and not independently affected in a material way by the aid, as the investment’s main purpose and competitive effect are expected in the wholesale generation market.

(268)

As regards the geographical market, the Commission notes that Romania, Hungary, Bulgaria, and Greece tend to have certain price convergence in a regional cluster, as they face similar structural constraints. (105)

(269)

For the reasons above, the Commission considers that the relevant geographical market for the assessment of the measures at stake is at least national (Romania) and that it may extend into neighbouring interconnected countries (in particular to Hungary, Bulgaria, and Greece) insofar as cross-border flows and price signals create a homogenous competitive environment.

(270)

For these reasons, the relevant markets for the assessment of the measures at stake are the electricity market in Romania and the electricity market in the South-East European cluster.

6.2.2.2.   Identification of the positive effects of the aid

(271)

The transition towards climate neutrality involves the progressive phase out of fossil fuels starting from the most polluting ones. Most Member States have already announced their plans for phasing out coal over the coming years (106). Similarly, Romania’s commitment to phase out coal-based energy production by 2030 was confirmed in its National Recovery and Resilience Plan (see recital (29)). This entails the gradual elimination of approximately 4 920 MW of coal-based installed capacity (lignite and hard coal), with 3 070 MW to be withdrawn by the end of 2025 and the remaining capacity by 2032 at the latest. Romania expects that these developments may lead to grid stability issues and potential security of supply concerns.

(272)

The preservation and prolongation of nuclear-based energy capacities therefore allow to maintain the necessary generation at the supply side, while contributing to the decarbonisation of the energy system. The measure therefore has positive effects on the market as it helps decarbonise the electricity system and will increase security of supply. Since Romania has interconnections with neighbouring countries, these positive effects would likely benefit the neighbouring Member States importing electricity from Romania. By ensuring secure supplies when phasing out the most polluting fuels, nuclear generation also contributes to achieving Union decarbonisation objectives.

6.2.2.3.   Necessity of State intervention

(273)

In order to determine whether an aid measure is necessary, the Commission must assess whether the measure is targeted towards a situation where it can bring about a material improvement that the market alone cannot deliver. Aid which merely improves the financial situation of the beneficiary but is not necessary for the attainment of the intended objective cannot be compatible with the internal market. The Commission must therefore assess whether State aid is necessary to achieve the objective of promoting the refurbishment and lifetime extension of Unit 1 of the Cernavodă NPP.

(274)

Exercising its right to choose between different energy sources under Article 194 TFEU, Romania has concluded that the refurbishment and life-time extension of the nuclear capacity is necessary to maintain the baseload electricity supply needed for balancing renewables and to decarbonise the electricity system and ensure security of supply (see section 2.1.4).

(275)

The Romanian authorities maintain that, given the project’s high investment costs and significant risks which cannot be managed through market mechanisms alone, the project requires State support (see recitals (41) to (43)). Romania further explains that the project’s estimated cost of EUR 3.584 billion exceeds the financial capacity of the beneficiary and the project presents commercial and policy risks unsuitable for market actors. In particular, the volatility in Romania’s electricity market complicates long-term revenue certainty (see recitals (41) and (43)), which would make it not possible to realise the project without State intervention.

(276)

As described in detail in section 2.1.4, Romania also stresses that the project plays a crucial role in strengthening energy security and achieving Romania's public policy objectives, including those in the PNIESC, National Energy Strategy, and EU climate neutrality targets. Romania thus considers State aid as pivotal for safely, efficiently, and sustainably executing the investment, addressing market failures and providing significant positive externalities by supporting energy infrastructure critical for climate and security policies.

(277)

Under established case law, Article 107(3)(c) TFEU does not require a market failure as a precondition for State aid compatibility. Nonetheless, the existence of such a failure may constitute a relevant factor in the compatibility assessment (107).

(278)

The Commission considers that it remains unlikely that market forces alone would be capable of ensuring the timely delivery of the project and ensure the maintenance and development of electricity generation from nuclear energy sources in Romania.

(279)

The Commission notes that investments in NPP refurbishments and lifetime extensions represent one of the most cost-effective means to facilitate large-scale, low-carbon, dispatchable electricity generation (108). Refurbishment investments can considerably extend plant life at a fraction of the costs of newbuild investments, and the electricity produced from lifetime extensions assets can be a competitive option for low-carbon generation (109). Nevertheless, despite economic and strategic advantages, such investments appear to be systematically under-provided by private markets for multiple reasons.

(280)

First, investments to replace and refurbish key components of nuclear power plants necessitate substantial upfront capital expenditures, often amounting to billions of euros. Such projects demand significant financial commitment upfront due to their capital-intensive nature, which includes the costs associated with advanced technology, stringent safety requirements, and regulatory compliance. The scale of these investments typically exceeds the borrowing capacity of most operators, who may lack sufficient collateral or creditworthiness to secure such large loans independently. Romania explained that this is indeed the case of the notified project (see recital (274)). Moreover, the extended payback periods, often spanning several decades, exacerbate the situation by increasing the financial exposure and risk involved. Consequently, lenders tend to apply substantial risk premiums to the financing terms, ultimately rendering these investments financially unviable without State intervention or support structures to mitigate these challenges.

(281)

Second, an important obstacle to obtaining financing is the mismatch between the long payback horizon and the inability of operators to secure revenue certainty over equivalent timeframes. This is even more relevant in current electricity markets, which are significantly changed by the energy transition and the rapid deployment of renewable energies, as well as regulatory reforms accompanying this transition. In consequence, even the most experienced market participants struggle to make comfortable predictions for power prices in the far future and most electricity trades cover not more than 5 years in the future.

(282)

Third, energy-only markets, which price electricity at the short-run marginal costs of the marginal generator, in general fail to compensate dispatchable, low-carbon nuclear plants for the capacity, reliability and stability they provide for the electricity grid. As argued by Romania, nuclear lifetime extensions can also play an important role in maintaining the security of electricity supply, as they help maintain a stable and reliable baseload electricity source that is important in a national energy mix increasingly dominated by intermittent renewables (see recitals (38) and (39)). As stressed by the Romanian authorities in recitals (30) to (32), nuclear energy, particularly the CANDU technology at the Cernavodă NPP, provides a reliable and stable source of electricity essential for supporting Romania’s national power system considering the closure of coal-based capacities by 2030 and the delays in new gas unit constructions.

(283)

Finally, nuclear investments require regulatory and policy certainty over long time horizons. Investment decisions commit capital over the long term, but operators are faced with the prospect of adverse regulatory outcomes, imposition of new safety requirements (as occurred after Fukushima) and policy reversals driven by political changes. State commitments offering protection against regulatory and policy changes, with clear and balanced risk-allocation frameworks, are typically required to resolve this coordination failure between private investment decisions and public policy objectives.

(284)

Those market failures in relation to investments in the refurbishment and lifetime extension of nuclear assets can be observed in the Romanian market and represent significant obstacles for the project, as documented by the Romanian authorities.

(285)

In light of those market failures and considering Romania’s energy and climate policy goals which aim to ensure security of supply and long-term decarbonisation of electricity generation, State support for the refurbishment and lifetime extension of Unit 1 of the Cernavodă NPP appears necessary.

(286)

Based on the above, the Commission considers, at this stage, that State intervention is necessary to ensure the refurbishment and lifetime extension of unit 1 of the Cernavodă NPP.

6.2.2.4.   Appropriateness

(287)

The Commission must determine in its assessment whether the proposed aid measures represent an appropriate policy instrument to address its objective, in this case to incentivise the refurbishment and lifetime extension of Unit 1 of the Cernavoda NPP to facilitate the decarbonise the energy system and maintain security of supply.

(288)

Romania argues that State aid is a necessary and appropriate means to incentivise the project because it would ensure the continuity of critical, low-emission generation capacity in an interconnected regional market, directly contributing to EU climate and energy objectives (see recital (39)). The absence of this capacity would reduce domestic energy supplies potentially causing higher and more volatile power prices (see recitals (37), (46) and (47)). The refurbishment is a more cost- and time-efficient solution compared to constructing a new nuclear unit as it leverages existing infrastructure, maintains local expertise, and allows environmental and security benefits to be realised over a shorter timeframe (see section (55)). Thus, according to Romania, the proposed State aid package contributes to the rapid deployment of a stable decarbonised capacity, supporting the energy transition in a pragmatic and sustainable manner.

(289)

The Romanian authorities argue that the proposed combination of aid measures is appropriate because it addresses the market failures relevant to the project: the large scale of the capital investment requirement, the financing shortcomings, the long development cycle and significant commercial risk owed to the long-term exposure to market price signals, which are themselves distorted by interventions and long-term exposure to political and legislative decisions (see recitals (41) to (45)).

(290)

The Commission acknowledges that, given the scale, duration, and technological complexity of the project, a single measure is unlikely to address all relevant market failures. Some degree of complementarity between different measures may therefore be justified. However, the Commission notes that Romania has not sufficiently demonstrated why each specific measure, and the chosen combination, is the least distortive options that addresses the identified market failures, and why alternative designs of the same broad instruments, or a combination of fewer instruments would not achieve comparable results with less distortion of competition.

(291)

The Commission notes that the proposed measures address multiple categories of risks. The direct grant and the State-backed guarantees appear to be complementary: while the direct grant reduces the capital needed for the project and addresses its economic viability (see recital (116)), the guarantees make the remaining debt financeable at acceptable rates (see recital (126)). However, it has not been sufficiently demonstrated that State-backed guarantees would be insufficient to address the financing market failures identified and thus need to be complemented by a non-reimbursable grant of a considerable size.

(292)

The appropriateness of the aid instruments also depends on ensuring that the investor retains meaningful exposure to construction, operational, and market risks and remains incentivised to manage them efficiently. At this stage, the Commission cannot conclude that the proposed package achieves an appropriate balance between reducing risks to enable the investment and maintaining incentives for efficient behaviour. While the Commission recognises that risk mitigation is necessary for nuclear investments of this nature, a generation project must retain a degree of market and operational exposure that reflects its role within a competitive electricity market and avoids excessive risk transfer to the State.

(293)

The Commission considers that the design of the proposed two-way CfD significantly limits market-risk exposure by virtue of its duration, aligned with the full expected 30-year lifetime of Unit 1, post refurbishment, and of the use of a production-based remuneration formula that removes important price-signal-incentives for efficient operational behaviour. Furthermore, the reference-price definition also partly removes the operator’s exposure to market signals in the first five years of operations and therefore lowers its incentives for efficient market participation during that time (see also section 6.2.2.6.2).

(294)

For these reasons, the Commission has doubts at this stage that the proposed combination of support measures and the aid package design are the most appropriate instrument to ensure the development of the project. The Commission therefore invites interested parties to comment on the appropriateness of the aid instruments proposed by Romania.

6.2.2.5.   Proportionality

(295)

To assess the proportionality of a measure, the Commission must verify that the measure is limited to the minimum that enables the successful completion of the Project for the attainment of the objective pursued.

(296)

To assess the proportionality of the aid in the present case, the Commission needs to take into account the combination of the measures proposed by the Romanian authorities, namely the direct grant, the State guarantees, the CfD, and the protection mechanism.

6.2.2.5.1.   The aid package

(297)

With regards to Measure 1, which takes the form of a non-reimbursable direct grant of EUR 600 million from the Modernisation Fund, the Commission notes that the Romanian authorities have provided NPV and IRR calculations across several scenarios involving partial aid configurations (see section 5.5). In Scenario B, where the project does not benefit from the CfD, the project IRR reaches [7-9]% (exceeding the project’s target IRR of [7-9]%), and the project’s NPV is positive. In light of the market price assumptions included in the financial model - projected at [80-100] EUR/MWh in 2030 and gradually declining to [70-90] EUR/MWh by the end of the forecast period in 2060 (see recital (93)) - this suggests that the CfD’s overall net effect in the factual (base case) scenario would be to claw back excess market revenues from the beneficiary. This is not inconsistent with a CfD strike price being set at [80-100] EUR/MWh. However, the fact that the CfD is expected to operate predominantly in clawback mode, further suggests that Measure 1 (the direct grant) has been sized beyond what is strictly necessary for the project, and may therefore be disproportionate.

(298)

As regards Measure 2, which entails the granting of State-backed guarantees covering 80 % of the value of the loans contracted by SNN to finance the project, as well as the capitalised interest and associated fees incurred during the construction period, at a fee of [0.5-3]% per annum of the guaranteed loan, Romania considers that this measure is provided on commercial terms as it fulfils the conditions for ruling out the existence of aid in individual guarantees as set out in the Commission's Guarantee Notice (see section 5.2). The Commission already explained that Measure 2 is part of the single intervention and cannot be severed from the other aid measures supporting the project (see section 6.1.1 and recital (220)). Therefore, a State-backed guarantee in support of a project that receives State support cannot be considered to entail ‘no aid’. With regard to the question whether the guarantee fee charged is proportionate, the Commission is lacking the necessary information for assessing whether the guarantee fee takes into account, in an appropriate manner, the relevant risk profile linked to the operation it covers, the undertaking guaranteed (SNN), and the collaterals provided. Therefore, the Commission expresses doubts on the proportionality of Measure 2 and invites the Romanian authorities to provide the relevant information necessary to facilitate this assessment.

(299)

Measure 3, which provides direct price support through a two-way CfD, constitutes an aid measure of particularly long duration (30 years) in the energy sector. The Romanian authorities justify this duration on the basis that it reflects the expected operational lifetime of the refurbished asset. They consider that the CfD is a proportionate, market-compatible support instrument calibrated to the project's actual financial needs, which does not confer an undue competitive advantage while reducing financing costs and delivering lower, more predictable electricity prices for consumers (see recital (131)).

(300)

The Commission questions whether a support measure of such duration is justified in the present case, particularly given that the investment costs will also be partially de-risked through Strate-backed guarantees. Unless refinanced, the debt financing, which covers most project costs, is expected to carry an [14-19]-year repayment period post commercial operation (see recital (160)). On this basis, the Commission considers that the direct price support should in principle be aligned with the terms of debt repayment and that revenue protection largely exceeding that duration does not seem necessary to incentivise the project.

(301)

The Commission therefore doubts whether 30 years of direct price support represents the minimum necessary to enable SNN to carry out the project. While long-term revenue protection is a well-established requirement for large scale, long-term nuclear investments, such protection does not necessarily need to extend across the project’s entire operational lifetime.

(302)

The Commission acknowledges that the two-way CfD limits excess remuneration during periods of high or volatile electricity price as described in recitals (130) and (131). However, a comparable outcome can be achieved with a shorter CfD duration, through a complementary claw-back or gain-sharing mechanism applicable over the lifetime of the asset, which Romania has already proposed (see section 5.3.4).

(303)

Finally, as regards Measure 3, the Commission considers that the events triggering CfD strike price adjustments are defined at this stage in terms that leave excessive room for interpretation and potential abuse. The coverage of operational cost increases unrelated to the intent, fault, or negligence of the beneficiary sets a low threshold that could capture routine business risk rather than exceptional circumstances. Similarly, protection against legislative changes seems framed too broadly and, without further specification, could extend to changes that fall within normal business risk of a commercial operator. It is further unclear who would determine whether claimed cost increases meet the qualifying conditions, as there appears to be no independent verification mechanism.

6.2.2.5.2.   The target return

(304)

The aid package described in section 5 consists of risk-mitigating measures provided by the State and therefore lowers the overall risks associated to the project for the company. The lowering of the risks should therefore be duly reflected in the final determination of the State aid required for the realisation of the project and the target return to the beneficiary. The Romanian authorities consider that all the measures ensure that the right balance is drawn between the risks of the project and the returns for the beneficiary.

(305)

As described in section 4.8, the Romanian authorities have estimated the target return of [7-9]% at the level of the cost of equity which is calibrated using a bottom-up approach relying on the CAPM methodology. In particular, the Romanian authorities rely on a set of 14 comparable companies to estimate the target return.

(306)

The Commission has reservations regarding the estimation of the WACC submitted by the Romanian authorities, as outlined in section 4.8.

(307)

Firstly, the Commission questions the decision of the Romanian authorities to adopt a theoretical approach to estimating the WACC, given that the beneficiary company is a listed entity with publicly available WACC parameters. In this context, the Commission notes that the beneficiary company is itself included amongst the peer companies utilised by the Romanian authorities in their WACC estimation.

(308)

Secondly, the Commission has doubts regarding the methodology employed by the Romanian authorities for calibrating certain WACC parameters, as detailed in section 4.8, such as the country risk premium, beta, equity market risk premium, the gearing of the project, and the credit spread.

(309)

Lastly, the Commission notes that the WACC analysis put forward by the Romanian authorities, as detailed in section 4.8, is not supported by a benchmarking analysis against projects and investments with a risk profile similar to that of the project. However, such a benchmark analysis is needed to corroborate the cost of equity level.

6.2.2.5.3.   Financial model and the Project’s costs and revenues

(310)

The Romanian authorities submitted a financial model for the project as well as estimations for the costs and revenues and other underlying assumptions (see section 4.7).

(311)

The Commission notes that the Romanian authorities have not provided sufficient details regarding the underlying cost assumptions, the benchmarks used to substantiate them, or the market price expectations. While the authorities indicate that cost estimations reflect the anticipated refurbishment costs of nuclear capacity, more supportive evidence is necessary to demonstrate that the assumptions are credible, adequately justified, and consistent with sectoral practice. In the absence of such information, the Commission has doubts as to whether these cost elements are correctly estimated. Furthermore, the financial model provided by the Romanian authorities needs to be updated as it does not reflect the latest development of the financing structure of the project. For instance, the EIB loan described in recital (124) and approved in November 2025 is not included in the financial model.

(312)

For a complete assessment of the proportionality of the strike price, it is necessary to evaluate how sensitive it is to changes in key underlying assumptions. These include, in particular, market price expectations since the level of support under the CfD depends on the difference between the strike price and the reference market price. The same holds true for the core cost inputs used to calibrate the strike price, notably the capital expenditure, operating and maintenance costs, and financing costs, i.e. it would be necessary to evaluate how sensitive it is to changes in key underlying assumptions.

(313)

Given the uncertainty surrounding certain assumptions and parameters the incomplete reflection of the project’s financing conditions in the financial model, and the absence of sensitivity analysis, the Commission considers that further scrutiny is necessary and has doubts as to whether the model works appropriately and ensures that support is limited to the minimum required.

6.2.2.5.4.   Overcompensation control mechanism

(314)

The Romanian authorities propose two overcompensation control mechanisms linked with the CfD. The first is a capital gain share, under which any financial returns exceeding the target IRR are split equally between the beneficiary and the state. Capital gains are calculated every five years from commissioning of the asset, using a re-run of the original financial model. Romania insists that the mechanism only entails the sharing of upside gains while leaving the beneficiary fully exposed to downside risk. The second mechanism is a construction phase gain-sharing mechanism, whereby if actual construction costs fall below the amounts estimated in the financial model, the resulting savings reduce the strike price. This mechanism is bidirectional, but the strike price of the CfD would only be increased to account for cost overruns attributable to legislative changes (see section 5.3.4 ).

(315)

The proposed overcompensation mechanisms raise several concerns. As regards the capital gain share, the Romanian authorities have provided no justification for the equal split of excess returns. Given that SNN benefits from several aid measures and protections, it is not clear why the State should not retain a larger share of the returns over the target IRR. On the construction gainshare mechanism, Romania did not specify the sharing factor that would apply to construction costs savings, making it impossible to assess whether the mechanism provides meaningful protection against overcompensation. More broadly, the precise calculation methodology underpinning both mechanisms has not been clearly set out yet, making it impossible to assess whether the mechanisms would operate as intended in practice. For example, Romania has not clearly explained how the model will be re-run, which inputs would be updated and on what basis, who is responsible for producing and validating the calculations, or how disputes regarding the figures would be resolved. In the absence of this information, the Commission has doubts on the effectiveness of the proposed overcompensation control mechanisms.

6.2.2.5.5.   Conclusion on proportionality

(316)

For reasons outlined in the preceding sections, the Commission has doubts as to whether the combination of the proposed support measures and the corresponding aid package is proportionate for ensuring the development of the notified project. The Commission therefore invites interested parties to comment on the proportionality of the aid measures proposed by Romania.

6.2.2.6.   Avoidance of undue negative effects on competition and trade

(317)

For the aid to be compatible with the internal market, the negative effects of the aid measure in terms of distortions of competition and impact on trade between Member States must be limited and outweighed by the positive effects. In particular, it is important to avoid any potential undue negative effects on competition and trade.

(318)

The project concerns the refurbishment of a currently operating generation unit at the Cernavoda NPP, of which SNN is the historical operator. SNN also operates the plant’s other nuclear unit on the same site and is the sole nuclear operator in Romania, with decades of accumulated technical expertise and institutional knowledge specific to the CANDU reactor technology employed at Cernavoda. In this context, the decision by the Romanian authorities to entrust the refurbishment projects to SNN without a competitive tender for the selection of the project sponsor and operator appears to have a credible and economically rational basis.

6.2.2.6.1.   The design of the 2-way Contract for Difference

(319)

The Romanian authorities, as outlined in section 5.3, intend to provide direct price support via a two-way CfD. This CfD would be production-based, meaning that remuneration under the CfD is tied to the electricity output of the NPP, as detailed in recital (139).

(320)

Romania clarifies that the production-dependent aspect of the CfD design considers the physical and safety limitations of Unit 1. The original reactor design from 1979 intended for Unit 1 to operate at full capacity in baseload mode, and the upcoming refurbishment project would not change this aspect (see recital (79)). Romania emphasises that Unit 1 is not licensed to operate flexibly, in a load-following manner. Operational decisions are primarily driven by nuclear safety, plant integrity, and long-term fuel efficiency, rather than market fluctuations. Although there is no regulatory restriction against modulating reactors for economic reasons, nuclear safety standards take precedence over other requirements, considerations, and interests. The Romanian authorities state that technical data is unavailable to detail the licensing process, associated costs, or potential delays, should a load-following approach be explored for Unit 1. Such a design change would require additional engineering studies, safety analyses, and redesigning of the existing system, impacting the current conceptual design solutions. Nevertheless, the Commission considers that efficient incentives for operation and maintenance should be preserved, without compromising safety.

(321)

Regarding SNN’s strategy for modulation during the extended 30 years operational lifetime, Unit 1 will have limited flexibility within 10 % of full power in accordance with CNCAN norms. However, this flexibility would be reserved for extreme scenarios affecting either the grid or the unit, as laid out in the operational agreement between SNN and Transelectrica, the Transmission System Operator (see recital (79) and footnote 53).

(322)

To avoid incentivising overproduction during periods of market surplus, where continued output would exacerbate price depression, the Romanian authorities propose that no CfD payments will be made during periods of negative market prices (see recital (155)).

(323)

The Commission considers that direct price support in the form of CfDs should be designed so as to avoid distorting operational decisions and to foster efficient maintenance decisions. These decisions should be guided by market price signals, as much as allowed by the technical capacity for output modulation and safety considerations, to achieve system-optimal outcomes. State support measures like CfDs should not distort incentives for operators to generate electricity when market prices exceed short-term variable costs, nor discourage production reduction when prices fall below that level. Maintenance should be performed at times when the system is less in need of the installations’ production, for example in moments of low demand or excessive generation. Under a production-based CfD, however, SNN would be incentivised to maximise production whenever feasible, regardless of market price changes, since revenues are tied with production. Such behaviour can exacerbate oversupply events and dampen scarcity signals, as acknowledged by the Romanian authorities.

(324)

In its guidance (110) on two-way CfD design, the Commission stresses that nuclear plants incur real marginal production costs (111). Consequently, the guidance explains that withholding support during negative price hours is insufficient to prevent distortions because the nuclear plant would still have inefficient incentives to maximise output when the prices are positive but below its marginal costs. For dispatchable assets like nuclear, the Commission considers that pure production-based two-way CfDs do not preserve efficient incentives for plants to bid based on their marginal cost. Instead, for such assets, the Commission considers that only production-independent CfDs can be considered as a good practice to maintain efficient incentives and avoid market distortions.

(325)

Furthermore, the Commission considers that even for less flexible nuclear generation assets, there are important reasons to prefer a production-independent CfD, which pays based on availability or capacity as compared to a production-based one. Firstly, removing incentives to produce when prices are below marginal costs can have a meaningful impact, especially considering the long-extended lifetime of Unit 1. Secondly, the Commission notes that licensing constraints regarding the flexible operation of the Unit 1 as described in section 4.4 are presented as external limitations, yet they are at least partly inherent to the operator’s investment decision. An operator faced with a CfD contract that incentivises it to seek modulation licensing is likely to pursue it if technically and financially feasible. By contrast, a production-based CfD would permanently entrench the licensing constraint, regardless of feasibility.

(326)

The Commission considers that a production-based CfD, which links the operator’s revenue to output, can also distort maintenance decisions if no incentives for efficient maintenance are provided (112), including for less flexible nuclear generation assets. This is significant, as for nuclear power plants, maintenance decisions are complex and outages are typically long and costly, and the financial stakes of getting the timing wrong are high. A production-based CfD (in particular, if the period over which the reference price is calculated is short) however can distort the timing of the maintenance compared to what would be optimal from a system perspective. By contrast, a well-designed production-independent CfD can better preserve the nuclear power plant’s incentives for efficient maintenance scheduling based on market signals. The ability to schedule efficient maintenance is largely independent from the nuclear power plant’s ability to operate flexibly, therefore it is important to ensure that the CfD does not distort such incentives also for nuclear assets with less operational flexibility.

(327)

Romania proposes a period of one month for the calculation of the CfD’s reference price and a reference price calculated initially as a blend between the NPP’s own transaction prices and market indexes which gradually transitions, by year six of operation, towards market indexes (see section 5.3.1). Furthermore, Romania explains that the price of bilateral contracts concluded by the NPP would also be included in the reference price of the CfD (even though the formula described in recital (142) does not include it at this stage).

(328)

The Commission considers that the proposed reference price design also raises several concerns.

(329)

First, a production-dependent CfD with a short period over which the reference price is calculated, can result in inefficient maintenance decisions (see recital (325)).

(330)

Second, in the first five years, SNN’s own transaction prices would form part of the reference price, creating a largely self-referential settlement mechanism (see recital (144)). This means that SNN could influence the reference price of the CfD through its own commercial behaviour, which would allow it to sell power at artificially low prices compensated through a higher CfD payment, thereby potentially passing on aid to consumers. At the same time, this design feature, combined with a production-based CfD, may further reduce market-responsiveness incentives.

(331)

Third, applying a 0.9 multiplier to ROPEX_FM_Y in years one to five, and 0.85 from year six onwards (as well as similar correction for the day ahead market price, see recitals (145) to (150)), means that the reference price is systematically set below the market index, which mechanically increases the CfD settlement. However, the Commission considers that, if the strike price is set correctly, there is no reason to deflate the reference price below the market index. Doing so has the effect of hiding the true level of support SNN receives under the CfD, embedding part of the aid in the reference price formula, rather than in the strike price.

(332)

Fourth, the Commission notes that portfolio transfers are included in the spot component of the reference price (see QID_spot in recital (100)). This means that intra-group transfers, which may not be conducted at market prices, are allowed to feed into the reference price calculation, potentially creating a mechanism that could influence CfD settlements.

(333)

Finally, the Commission notes that that the reference price of the CfD would be calculated as the weighted average price on all markets in which the unit will be trading, including the PPA prices. Romania did not explain what the underlying rationale for this is. However, the Commission notes that the inclusion of PPA prices in the definition of the reference price of the CfD also raises concerns as this would have the effect of insulating the plant from the consequences of selling PPAs at artificially low prices, thereby weakening its incentives to negotiate profit-maximising PPA terms. The Commission is therefore concerned that this design feature may increase the risk of aid being passed through to consumers via low-priced PPAs.

6.2.2.6.2.   Effects on market structure and spillover of aid

(334)

The Commission notes that the Romanian electricity generation market is moderately concentrated, with SNN holding approximately 20 % of net electricity production and controlling 7 % of installed capacity (see section 2.1.3). Romania submits that the refurbishment project for Unit 1 of the Cernavodă NPP will ensure the maintenance of existing capacity, rather than introducing new-built capacity (see recital (86)), which suggests the measure’s impact on market concentration would be limited.

(335)

Regarding the measure’s potential effects on the generation market, after refurbishment, Unit 1 is expected to re-enter commercial operation with the same capacity it has currently (~700 MW net). However, the Commission acknowledges that structural changes in the market are underway, driven by Romania’s transition towards renewable energy, which aims for 38 % renewable energy consumption by 2030. This transition includes significant expansion in wind, solar, nuclear, and storage capacity. Therefore, while the measure does not lead to direct addition of new-built capacity, the shifting landscape could indirectly influence SNN’s market position as new and renewable capacities are integrated. As one of the largest state-owned producers of carbon-free baseload electricity, alongside Hidroelectrica, SNN is well positioned to capture, in the context of the coal phase-out, a significant portion of the market share formerly held by coal operators, particularly in the context of Romania’s future investments in the nuclear sector.

(336)

Nevertheless, the Commission considers that the refurbishment of Unit 1 of the Cernavodă NPP is unlikely to hinder investments into additional generation assets as renewable energy deployment is projected to increase significantly and parallel aid schemes for non-nuclear sources of energy (RES, storage, etc.) have been or will be implemented in Romania, ensuring continued support for technology diversification and competition among clean energy sources.

(337)

Regarding the impact on electricity prices, although the impact of the NPP on electricity market prices in Romania is important, as Unit 1 of the Cernavodă NPP provides approximately 10 % of Romania's electricity, playing a major role as a low-cost, stable baseload provider, the refurbishment will essentially have a short-term effect. The planned shutdown of Unit 1 of the Cernavodă NPP for refurbishment will remove 700 MW of capacity, potentially leading to slightly higher electricity prices during that window as more expensive sources fill the gap. This impact will, however, be limited to three years and end in 2030, when the capacity will be reintroduced in the market.

(338)

As regards cross-border prices, the Commission assesses that the refurbishment of Unit 1 of the Cernavodă NPP might have an impact on regional electricity prices in Romania, Bulgaria, and Hungary as Romania is well interconnected with its neighbours as described in section 6.2.2.1. The project will ensure 30 more years of operation for the reactor, which currently provides roughly 10 % of Romania's electricity. On the short-term, the temporary removal of 700 MW of nuclear capacity could lead to increase regional prices, as a result of the loss of around 10 % of Romania’s generation. However, on the long-run, Unit 1 of the Cernavodă NPP, once refurbished, is unlikely to significantly impact either domestic or regional prices.

(339)

The Romanian authorities argue that the two-way CfD is designed to preserve market price signals and expect Unit 1 of the Cernavodă NPP not only to coexist with RES, but also to facilitate their integration into the Romanian power system. However, as explained in section 6.2.2.6.1, at this stage the Commission preliminarily considers that the CfD design does not incentivise SNN to operate efficiently on the market.

(340)

Regarding the potential for spillover of aid to consumers, as mentioned in recital (332), the Commission expresses doubts on the inclusion of PPA prices in the definition of the reference price of the CfD. Also, at this stage, the Commission considers that, without clearly defined conditions on the NPP’s electricity trading strategy, State aid could be transferred to electricity consumers through below-market bilateral contracts. The Commission questions whether the PPA auctions would be truly open and competitive and considers that linking PPA prices to the CfD reference price could reduce SNN’s incentives to secure competitive PPA terms, increasing the risk of aid pass-through.

(341)

The commitment to sell at least 80 % of SNN Unit 1’s output on organised markets and the remainder of that output through objective, transparent and non-discriminatory auctions is, in principle, capable of supporting competitive price formation and limit SNN’s influence. Nevertheless, the Commission requires more details on auction framework, including product definitions, lot sizes, eligible parties, minimum conditions, etc. Given the scale of SNN’s output, even small choices may significantly affect liquidity and market outcomes. Therefore, in the absence of fully specified, binding rules, the Commission cannot yet conclude that the trading strategy will be executed in a manner that prevents undue advantages to SNN. Similarly, the Commission considers that without clear provisions and conditions on the trading strategy of the NPP, the risk of aid spilling-over to final electricity consumers via bilateral contracts at below-market prices cannot be fully excluded.

(342)

For the reasons set out above, the Commission has doubts on the impact that the notified measures will have on competition and trade in the electricity markets.

7.   COMMISSION’S DOUBTS AND GROUNDS FOR OPENING THE FORMAL INVESTIGATION PROCEDURE

(343)

The Commission considers at this stage that the notified measures, together with the financial contribution by SNN to finance the development phase of the project are part of a single intervention which involves State aid within the meaning of Article 107(1) TFEU and supports the development of the economic activity of nuclear electricity generation. The Commission also considers, as of yet, that State support for the Project is necessary and has an incentive effect.

(344)

At the moment, based on the information submitted by Romania, the Commission does not have sufficient elements to conclude whether the conditions for the compatibility of the aid with the internal market in accordance with Article 107(3)(c) TFEU are met, in particular whether the aid is appropriate and proportionate, and that undue negative effects on competition and trade are avoided. Furthermore, the Commission cannot confirm, at this stage, that the design of two-way CfD, as proposed by the Romanian authorities, fully complies with the design principles set out in Article 19d(2) of the Electricity Regulation and that the proposed measures do not infringe relevant provisions of EU law. In the light of the foregoing considerations, the Commission, acting under the procedure laid down in Article 108(2) TFEU, requests Romania to submit its comments and to provide all such information as may help to assess the aid, within one month of the date of receipt of this letter. The Commission requests the Romanian authorities to forward a copy of this letter to the potential recipient of the aid immediately. The Commission wishes to remind Romania that Article 108(3) of the TFEU has suspensory effect and would draw the Romania’s authorities attention to Article 16 of Council Regulation (EU) 2015/1589, which provides that all unlawful aid may be recovered from the recipient. The Commission warns Romania that it will inform interested parties by publishing this letter and a meaningful summary of it in the Official Journal of the European Union. It will also inform interested parties in the EFTA countries which are signatories to the EEA Agreement, by publication of a notice in the EEA Supplement to the Official Journal of the European Union and will inform the EFTA Surveillance Authority by sending a copy of this letter. All such interested parties will be invited to submit their comments within one month of the date of such publication.

---

(1)  Regulation No 1 determining the languages to be used by the European Economic Community (OJ P 017, 6.10.1958, p.385).

(3)  Active customer means a final customer, or a group of jointly acting final customers, who consumes or stores electricity generated within its premises located within confined boundaries or self-generated or shared electricity within other premises, or who sells self-generated electricity or participates in flexibility or energy efficiency schemes, provided that those activities do not constitute its primary commercial or professional activity as defined in Directive (EU) 2019/944.

(4)  See Producție - Transelectrica.

(5)  See Monitiun24.pdf.

(6)  See Monitian24-2.pdf.

(7)  Source: Eurostat.

(8)  See TYNDB draft scenario report: https://2024.entsos-tyndp-scenarios.eu/download/

(9)  Law no. 123/2012, as amended and supplemented by European regulations as directly applicable acts, and by the regulatory framework developed by the Romanian energy regulator (ANRE).

(10)  A Distribution System Operator is the entity that manages the local electricity distribution network and delivers power to consumers. The DSOs operating under exclusive territorial concessions are Delgaz Grid, Distribuție Oltenia, Rețele Electrice România, and Distribuție Energie Electrică România.

(11)  The latest ANRE report available, regarding April 2025, indicates there were 241 active participants on the wholesale electricity market in Romania.

(12)  The Romanian authorities provided a list of the main market segments available on each platform. On OPCOM, these include the Over-the-Counter (‘OTC’) market, based on European Federation of Energy Traders (‘EFET’) contract types with standard products and an eligibility list; the Extended Auction Mechanism Market (PCCB LE-flex), operating under a standard contract with a flexible contractual appendix; the Continuous Negotiation Mechanism (PCCB-NC), based on a standard contract with standard products; the Electricity Market for Large Consumers, organised as a public auction for large customers; and the Centralised Electricity Acquisition Mechanism (MACEE), which was operational between January 2023 and March 2025. On BRM, the main market segments are the OTC market, based on EFET contract types with bilateral arrangements or BRM acting as central counterparty; and the Electricity Market for Large Consumers, similarly organised as a public auction for large customers.

(13)  The last regulated prices for non-household consumers were removed in 2014, and for households in 2021, with compensation mechanisms introduced temporarily during the energy crisis in 2021-2023.

(14)  The DAM operated by OPCOM and accounts for about 45–50% of total traded volumes. Romania explains that price signals are aligned with EU benchmarks such as Platts and EPEX, reflecting integration with the internal energy market. Transparent and non-discriminatory market access is ensured through electronic platforms.

(20)  See Monitdec24-cu-eticheta-1.pdf.

(21)  Herfindahl-Hirschman Index is a measure for market concentration, calculated by squaring the market share of each competing firm in the market and then summing the resulting numbers. Markets with a HHI above 2500 are generally seen as highly concentrated markets. The HHI values are taken from the annual CREG reports and are based on installed capacity and generation from installations connected at the transmission grid level.

(22)  See https://www.ceer.eu/wp-content/uploads/2024/10/C24_Romania-ENsummary.pdf.

(23)  See Monitdec24-cu-eticheta-1.pdf, p. 51.

(24)  See Monitdec24-cu-eticheta-1.pdf.

(25)  The second evaluation included the addition of the market shares recorded by PPC Energie and PPC Energie Muntenia, as both players belong to the same economic group. This alternative evaluation of the market concentration is presented by the Romanian authorities as more accurate.

(26)  In each annual report, two AICP values are presented by RCC, a definitive value for the previous year (which takes into account complete information) and an estimated value for the current year (which relies on partial information available at the time of the report).

(27)  According to Romania, the same is true for natural gas production and supply, both of which are placed significantly lower than their electricity counterparts.

(28)  See Romania’s recovery and resilience plan available at https://commission.europa.eu/business-economy-euro/economic-recovery/recovery-and-resilience-facility/country-pages/romanias-recovery-and-resilience-plan_en.

(29)  Transelectrica’s 2024–2033 ETN Development Plan flags Dobrogea/south-east as a high-infeed region where clustered wind output strains the grid, concentration increases losses, and requires stable production facilities, network reinforcements and modern voltage control (SVC) to integrate more RES and maintain high flexibility. See Energy Transport Network (ETN) Development Plan approved by the TSO on 7 October 2022.

(30)  Notably, Medium and low voltage (MV/LV) systems, protections, UPS/EPS, transformers, 6–10/24 kV busbars, Motor control centres (MCCs).

(31)  CANDU reactor is a Canadian design for a pressurised heavy water reactor (deuterium oxide) that uses heavy water as both a moderator and coolant.

(32)  The construction of the first unit started in 1982, unit 2 in 1983, and units 3-5 over the following four years. Unit 1 was connected to the grid in mid-1996 and entered commercial operation in December 1996.

(33)  LOLE, or Loss of Load Expectation, is a metric used in the electricity industry to measure the reliability of the power supply. It represents the statistically expected number of hours in a year when electricity generation is insufficient to meet demand. For example, a LOLE of 20 hours per year means that, on average, there are 20 hours where power shortages are expected.

(34)  Especially during times of high demand, coupled with low RES production, Romania puts forward that it has been in a net import position. TSO data show import volumes being frequently between 1 500 and 2 000 MW in the peak hours in 2024, with values of nearly 3 000 MW recorded on some occasions. Some projects are expected to close part of the gap between domestic production and consumption (e.g., new gas-fired power plant at Mintia, with about 1 000 MW in the first phase or refurbished power plant at Iernut, with 450 MW installed capacity) while other considerations are expected to further widen it (e.g., planned closure of the coal-based plants, occasional lower hydropower output due to droughts, coupled with an expected increase of electricity consumption). Under these circumstances, closing Unit 1 of the Cernavodă NPP would put significant pressure on the system and leave it exposed to the intermittent RES production and expensive imports.

(35)  See ERAA_2024_Annex_3_Detaile https://eepublicdownloads.blob.core.windows.net/public-cdn-container/clean-documents/sdc-documents/ERAA/ERAA_2024_Annex_3_Detailed_results_v2.pdf.

(36)  Romania submits that especially during times of high demand coupled with low RES production, it has been in a net import position. TSO data show import volumes being frequently between 1 500 and 2 000 MW in the peak hours in 2024, with values of nearly 3 000 MW recorded on some occasions. Some projects are expected to close part of the gap between domestic production and consumption (e.g., new gas-fired power plant at Mintia, with about 1 000 MW in the first phase or refurbished power plant at Iernut, with 450 MW installed capacity) while other considerations are expected to further widen it (e.g., planned closure of the coal-based plants, occasional lower hydropower output due to droughts, coupled with an expected increase of electricity consumption). Under these circumstances, closing Unit 1 of the Cernavodă NPP would put significant pressure on the system and leave it exposed to the intermittent RES production and expensive imports.

(37)  In particular, the Romanian authorities listed the following examples: Wolsong 1, Korea (2009-2011) – critical solution to calandria tube (reactor core component) installation, implemented into all subsequent CANDU refurbishment programs; Bruce Unit 6, Canada (2020-2023) – insights into welding and inspection management, while facing new challenges due to legacy material; Embalse, Argentina (2016-2019) – enhanced oversight, expanded OEM involvement, and refined project execution models now ensure that feeder replacement risks are fully understood and mitigated; Point Lepreau, Canada (2008-2012) – represented many first of a kind technical evolution on a CANDU-6, the lessons implemented including modifications and improvements to the automated tooling, and changes to the methods used for tube sheet cleaning; Darlington Unit 1, Canada (2022-2024), Darlington Unit 3, Canada (2020-2023) – set a benchmark for Candu reactor refurbishment in terms of collection and application of lessons learned.

(38)  i.e., 380 channels each composed of 12 fuel bundles.

(39)  Notably, pressure tubes, calandria tubes, feeders etc. that are to be removed.

(40)  “Engineering Services for Preparation of a Feasibility Study Regarding Storage of Radioactive Waste resulted from U1 refurbishment and U1 and U2 operation after refurbishment”.

(41)  Romania indicated that the construction of Unit 5 has been abandoned and its existing structures would be repurposed for waste storage.

(42)  ‘The lifetime extension of Unit 1 of the Cernavodă Nuclear Power Plant’.

(43)  See Resolution no. 27/23.12.2013.

(44)  See ‘Resolution No. 12 of the Ordinary General Meeting of Shareholders of SNN’.

(45)  The EPC contracted was signed with a consortium of four companies: Candu Energy Inc., Canadian Commercial Corporation, Ansaldo Nucleare S.p.a., and Korea Hydro & Nuclear Power Co. Ltd. and covers works to replace fuel channels and core tubes, upgrading nuclear and conventional plant systems and building new infrastructure, covering tasks from design and equipment supply to construction, testing and commissioning support.

(46)  Further information on these transboundary notifications addressed to other EU Member States in compliance with Article 7 of the EIA Directive (including all reactions received) can be found on the dedicated page of the Environment Ministry. See https://mmediu.ro/domenii/mediu/evaluare-impact/evaluare-impact-asupra-mediului-pentru-proiecte/centrala-nucleara-cernavoda/retehnologizarea-unitatii-1-a-cne-cernavoda-si-extinderea-depozitului-intermediar-de-combustibil-ars-cu-module-de-tip-macstor-400.

(47)  Pursuant to Article 117(1)(c) corroborated with paragraph (2), letters b) and c), and paragraph (4) of the Law 99/2016 on sectoral procurement.

(48)  The procedure was carried out in accordance with the provisions of CNCAN-ANAP Joint Order no. 264 / 2583/ 22.12.2022, which establishes the specific conditions for awarding certain public and sectoral procurement contracts for products, services, and/or works intended for systems that ensure nuclear safety, radiological protection, physical protection, cybersecurity, and the reliable operation of nuclear installations. Given that SNN is an electricity producer utilizing nuclear technology, all of its activities, including the procurement of goods, services and/or works, are strictly regulated and carried out in accordance with the applicable legal and regulatory framework.

(49)  AECL is the Original Designer of the NSP. In 2011, AECL sold its Commercial Operations Division to SNC Lavalin. In this context, AECL Commercial Operations Division was renamed Candu Energy Inc. Pursuant to the terms of an Intellectual Property License Agreement, Candu Energy Inc. received exclusive rights to use and commercialize the IP relating to the CANDU Business, including technology relating to C-6 and EC-6 reactors.

(50)  KHNP is a Korean company producing electricity from multiple sources, operating 25 nuclear power plants, including three CANDU-6 reactors similar to Cernavoda Units 1 and 2, as well as with successful experience in executing the refurbishment of the Wolsong Unit 1 reactor (Republic of Korea).

(51)  A ‘reactivity plan’ is a comprehensive safety program for nuclear power plants that monitors and controls activities affecting core reactivity to prevent uncontrolled power increases and maintain the integrity of fission product barriers.

(52)  A transient refers to any temporary, unplanned deviation of a nuclear power plant's operating parameters (such as temperature, pressure, or power output) from their normal, steady-state conditions, caused by events like changes in the electrical load or the presence of neutron poison.

(53)  See ‘Operation agreement 459’ signed on April 2023 between the operator SNN and the National Grid Dispatch.

(54)  ‘Balance of Plant’, which encompasses all the non-nuclear components and auxiliary systems of the power plant that are necessary for delivering electricity, such as the containment structure, turbine buildings, and systems for steam conversion.

(55)  Romania submits that both Hidroelectrica and SNN are now partially listed companies (Hidroelectrica with 19.94 % free float and SNN with 17.5 % free float), and both companies operate under market conditions.

(56)  See NECP, 75df0ac2-ecf9-4212-89ac-2a603bd43e36_en, p. 65, figure 18.

(57)  In the form of a transmission fee, which represents both a cost and a revenue for the company, charged to customers.

(58)  Inflation forecasts used in the Financial Model were provided by Baringa (Baringa European Reference Case - 2024 Q3), within the study for electricity prices, as well as by Oxford Economics, by means of macroeconomic databases, and were embedded into the model to provide consistent assumptions. Forecasts made by Baringa cover the period 2024 - 2060, while the ones provided by Oxford Economics refer to the period 2024 - 2050. After 2050, Romania estimated constant inflation over the long term, while exchange rates were calculated considering the purchasing power parity (PPP) rule, according to which exchange rate variations are determined by the inflation rate differential between several currencies.

(59)  Estimation of Weighted Average Cost of Capital at 31 December 2024 for nuclear electricity production. See report issued by PwC for SNN in April 2025.

(60)  Fortum Oyj, Pg&E Corporation, Pinnacle West Capital Corporation, Xcel Energy Inc., Endesa, S.A., Cez, A. S., American Electric Power Company, Inc., Bkw Ag, Enel Spa, Nextera Energy, Inc., Iberdrola, S.A., Firstenergy Corp., Uniper Se, S.N. Nuclearelectrica S.A.

(61)  To unlever the equity beta of comparable companies, Romania applies the following formula: Unlevered Beta = Equity Beta (Observed) / [1+ D/E].

(62)  To lever back the beta for the project, Romania applies the following formula: Levered or Equity Beta = Unlevered or Asset Beta * (1+ D/E).

(63)  The Romanian authorities explain that the equity risk premium is derived from the historical difference between the return on risky securities, calculated from a stock index, and the return on (quasi) risk-free capital market investments. Historical studies of developed capital markets have shown that yields on equities were between 5 and 7 percentage points higher than yields on (quasi) risk-free capital market investments, depending on the particular period reviewed.

(64)  The Romanian authorities explain that the credit spread reflects the perceived quality of the loan, the probability of default, the additional bankruptcy risk of a company compared to the similar risk of the state, and is practically estimated as the difference between the yield to maturity of corporate bonds and that of government securities with similar ratings and maturities. The credit risk premium depends on a number of factors, such as the capital structure of the company/industry, earnings cyclicality, operational leverage, and management quality.

(65)  The following adjustment is applied to the median debt-to-equity ratio of comparable companies to estimate the target debt-to-total capital (or gearing) of the project: (1+(1/D/E)).

(66)  Established by Article 10d of Directive 2003/87/EU establishing the Emission Trading System. See https://www.modernisationfund.eu/

(67)  CIRR is the minimum fixed interest rate that officially supported ECAs must charge on loans to foreign buyers.

(68)  The pricing reflected in the financial model is a blended rate of 4 CIRR values as of November 2025 plus a premium over the blended rate of [0-2]% defined internally by SNN. The currencies for the blended rates are Canadian Dollar, US Dollar, EUR and Korean Won for 10-year maturities. For reference, latest indications are published on the OECD website (see https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/financing-terms-and-conditions/cirrs.pdf). This rate shall be updated once pricing indications shall be received from ECAs.

(69)  Memorandum approved by the Prime Minister, registered with the Ministry of Energy under no. 6617/SIB/20.09.2024.

(70)  The Romanian authorities put forward that the interest and fees associated with the ECA loan are not paid over the construction period, these are capitalized and treated as principal and will be reimbursed after the plant commissioning over the [14-19]-year tenor.

(71)  Commission Notice on the application of Articles 87 and 88 of the EC Treaty to State aid in the form of guarantees (2008/C 155/02).

(72)  OPCOM is the institution responsible for operating Romania’s electricity and natural gas exchanges. It was established in 2000 as a subsidiary of Transelectrica (the national electricity transmission system operator) and operates under the oversight of Romania’s National Energy Regulatory Authority (ANRE).

(73)  Romania sets out that the price indicator is relevant as long as the reference quantity accounts for at least 50 % of the annual national electricity consumption.

(74)  Detailed information on energy production and consumption in Romania is provided by the Romanian TSO. See the Transparency section on https://www.transelectrica.ro/en/web/tel . Relevant information on day-ahead prices can be found on OPCOM’s website, see the monthly reports available at https://www.opcom.ro/tranzactii-rezultate/en/22.Additional information, such as the evolution of directly negotiated bilateral contracts, concluded in Romania starting September 2022, can be found in the monthly monitoring reports of the electricity market issued by the Romanian energy regulator (ANRE), available at https://anre.ro/despre/rapoarte/.

(75)  Romania argues that, to date, SNN is not in possession of any detailed data regarding the re-entry of a nuclear unit of similar scale and market impact into a liberalised energy market.

(76)  Examples of product structures used include (i) Contracts with delivery windows that end prior to, or begin after, planned maintenance periods, to ensure accurate delivery commitments; (ii) on BRM, optional contracts have been introduced that allow for non-delivery during planned maintenance, and specify acceptable limits for unforeseen outages or partial power reductions. These flexibility mechanisms are publicly offered and transparently structured.

(77)  The full definition is set out in ‘Annex 1 – Definitions and Interpretations’, to the draft CfD contract.

(78)  Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union, OJ C 262, 19.7.2016, p. 1–50, point 81.

(79)  Judgment of 19 March 2013, Bouygues and Bouygues Télécom v Commission and Others, Joined Cases C-399/10 P and C-401/10 P, EU:C:2013:175, paragraph 104; Judgment of 13 September 2010, Greece and Others v Commission, Joined Cases T-415/05, T-416/05 and T-423/05, EU:T:2010:386, paragraph 177; Judgment of 15 September 1998, BP Chemicals v Commission, T-11/95, EU:T:1998:199, paragraphs 170 and 171.

(80)  Judgement of 15 December 2021, Oltchim SA v Commission, T-565/19, paragraphs 93 to 197.

(81)  Judgments of 2 July 1974, Italy v Commission, 173/73, EU:C:1974:71, paragraph 35, and of 19 December 2013, Association Vent De Colère! and Others, C-262/12, EU:C:2013:851, paragraph 25.

(82)  Judgments of 16 May 2002, France v Commission, C-482/99, EU:C:2002:294, paragraph 36, of 30 May 2013, Doux Élevage and Coopérative agricole UKL-ARREE, C-677/11, EU:C:2013:348, paragraph 34, of 28 March 2019, Germany v Commission, C 405/16 P, EU:C:2019:268, paragraph 55, and of 20 September 2019, FVE Holýšov I and Others v Commission, T-217/17, EU:T:2019:633, paragraph 105.

(83)  Judgment of the Court of Justice of 11 July 1996, SFEI and Others, C-39/94, EU:C:1996:285, paragraph 60; Judgment of the Court of Justice of 29 April 1999, Spain v Commission, C-342/96, EU:C:1999:210, paragraph.

(84)  Judgment of the Court of Justice of 19 March 2013, Bouygues and Bouygues Télécom v Commission and Others, Joined Cases C-399/10 P and C-401/10 P, ECLI:EU:C:2013:175, paragraphs 103-105; Judgment of the General Court of 15 September 1998, BP Chemicals v Commission, T-11/95, ECLI:EU:T:1998:199, paragraphs 170 and 171.

(85)  Judgement of 22 September 2022, Austria v Commission, C-594/18 P EU:C:2020:742, paragraph 63.

(86)  Judgement of 22 September 2022, Austria v Commission, C-594/18 P EU:C:2020:742, paragraph 32.

(87)  Judgment of 15 April 2008, Nuova Agricast, C-390/06, EU:C:2008:224, paragraphs 50 and 51.

(88)  See Judgment of 3 December 2014, Castelnou Energía, Case T 57/11, ECLI:EU:T:2014:1021, paragraphs 181-184 with further references. See also Judgement of 30 November 2022, Austria v Commission, T-101/18 EU:T:2022:728, paragraph 30 and Judgement of 31 January 2021, C-284/21 P, Commission v. Braesch e.a.,EU:C:2023:58, paragraph 97. EU:T:2022:728, paragraph 30 and Judgement of 31 January 2021, C-284/21 P, Commission v. Braesch e.a., EU:C:2023:58, paragraph 97.

(89)  See Judgment of 11 September 2025, Austria v Commission (Paks II), C-59/23 P, ECLI:EU:C:2025:686, paragraph 53 and 54 with further references.

(90)  Judgment of 22 September 2022, Austria v Commission, C-594/18 P EU:C:2020:742, paragraphs 44 and 45.

(91)  Judgement of 22 September 2022, Austria v Commission, C-594/18 P EU:C:2020:742, paragraphs 48 and 49.

(92)   OJ L 26, 28.1.2012, p. 1.

(93)  Judgement of 22 September 2022, Austria v Commission, C-594/18 P EU:C:2020:742, paragraphs 43.

(94)  The notification pursuant to this provision is assessed by the Commission under the requirements of the Euratom Treaty, without prejudice to assessments to be carried out under the Treaty on the Functioning of the European Union and the obligations stemming from it and from secondary legislation. Thus, the assessment under Articles 41-43 of the Euratom Treaty is, inter alia, without prejudice to the application of the EU public procurement rules, the EU competition rules, EU environmental and international rules, and it does not amount to a clearance under the EU State aid rules.

(95)  See Judgment of 11 September 2025, Austria v Commission (Paks II), C-59/23 P, ECLI:EU:C:2025:686, paragraph 70.

(96)  See Judgment of 11 September 2025, Austria v Commission (Paks II), C-59/23 P, ECLI:EU:C:2025:686, paragraph 72.

(97)  See Judgment of 11 September 2025, Austria v Commission (Paks II), C-59/23 P, ECLI:EU:C:2025:686, paragraph 72.

(98)  See Judgment of 11 September 2025, Austria v Commission (Paks II), C-59/23 P, ECLI:EU:C:2025:686, paragraph 71.

(99)  Judgment of 17 July 2008, Essent Netwerk Noord and Others, C-206/06, EU:C:2008:413, paragraphs 40 to 59.

(100)  Judgement of 22 December 2008, Régie Networks v Rhone Alpes Bourgogne, C-333/07, EU:C:2008:764, paragraph 99 and case law cited.

(101)  Judgement of 22 December 2008, Régie Networks v Rhone Alpes Bourgogne, C-333/07, EU:C:2008:764, paragraphs 100 and 104.

(102)  To exclude the existence of a hypothecation link, the Court took into account the fact that, where the revenues from the levy are insufficient to cover the total aid amount, the relevant Member State is required to cover the shortfall by means of contributions from its general budget in case C-449/14 P (see paragraph 48 and 70 in Judgment of 10 November 2016, DTS Distribuidora de Televisión Digital SA).

(103)  See Judgment of 20 September 2018, Carrefour Hypermarchés and Others, C-510/16, EU:C:2018:751, paragraph 21, where hypothecation was excluded when the amount of aid was determined solely on the basis of objective criteria, not related to the allocated revenue, and subject to an absolute statutory ceiling; and Judgement of 27 October 2005, Distribution Casino France and Others, C 266/04 to C 270/04, C 276/04 and C 321/04 to C 325/04, EU:C:2005:657, paragraph 52, where hypothecation was excluded when the national legislation establishes the aid amount between a minimum and maximum value regardless of the revenue from the tax.

(104)  The requirement set out in Article 19d(1) to implement direct price support schemes for investment in new power-generating facilities the form of two-way contracts for difference or equivalent schemes with the same effects only applies to contracts concluded on or after 17 July 2027.

(105)  The monthly day-ahead electricity prices of those Member States showed significant price convergence in 2025, with maximum spread of approximately EUR 18/MWh. Available at: https://electricity-data.eurelectric.org/electricity-price.html.

(106)   https://energy.ec.europa.eu/topics/clean-energy-transition/eu-coal-regions-transition_en.

(107)  Judgement of 22 September 2022, Austria v Commission, C-594/18 P EU:C:2020:742, paragraphs 67.

(108)  See International Energy Agency, Nuclear Power in a Clean Energy System (2019).

(109)  See International Energy Agency, Projected Costs of Generating Electricity (2020).

(110)  Commission guidance on the design of two-way contracts for difference, C/2025/6701 or 19.12.2025.

(111)  Marginal costs are the costs that have to be paid in order to produce an additional unit of electricity.

(112)  Efficient maintenance is in line with system needs. This means, amongst other things, to maintain the power plant’s incentives to plan its maintenance based on the costs of maintenance and the foregone market revenues. For production-dependent CfDs, such incentives can be provided by calculating a reference price established over a period which is sufficiently long.