COMMISSION DECISION (EU) 2017/2112
of 6 March 2017
on the measure/aid scheme/State aid SA.38454 — 2015/C (ex 2015/N) which Hungary is planning to implement for supporting the development of two new nuclear reactors at Paks II nuclear power station
(notified under document C(2017) 1486)
(Only the English version is authentic)
(Text with EEA relevance)
1.
2.
2.1.
2.2.
MW |
||
|
Existing |
Phase-out |
Nuclear |
2 000 |
|
Coal |
1 292 |
1 222 |
Natural gas |
3 084 |
960 |
Oil |
410 |
|
Intermittent renewables/weather-dependent |
455 |
100 |
Other renewables |
259 |
123 |
Other non-renewables |
844 |
836 |
Sum |
8 344 |
3 241 |
Source: Hungarian authorities (Mavir) |
2.3.
2.4.
2.5.
2.5.1. FINANCING INTERGOVERNMENTAL AGREEMENT (THE ‘FINANCING IGA’)
2.5.2. THE EPC CONTRACT
2.5.3. RELATIONSHIP BETWEEN THE STATE AND THE BENEFICIARY
2.6.
2.6.1. DESCRIPTION OF THE HUNGARIAN ELECTRICITY MARKET
2.6.2. DESCRIPTION OF THE ENVISAGED EVOLUTION OF THE HUNGARIAN ELECTRICITY MARKET
Plant |
Plant Type |
Primary Fuel |
Nameplate MW |
Online Year |
Status |
Dunaujvaros Chp |
Waste |
Biomass |
44 |
2016 |
Under Constr |
Szeged Ccgt |
CC/Cogen |
Natural Gas |
460 |
2017 |
Advan Develop |
Szeged Ccgt |
CC/Cogen |
Natural Gas |
460 |
2017 |
Advan Develop |
Csepel III |
CC/Cogen |
Natural Gas |
430 |
2018 |
Advan Develop |
Tolna |
Wind |
Wind |
260 |
2018 |
Early Develop |
Gyor Region |
Wind |
Wind |
300 |
2019 |
Early Develop |
Szazhalombatta — Dunai Refinery |
CC |
Natural Gas |
860 |
2020 |
Advan Develop |
Almasfuzito |
Coal |
Coal Generic |
435 |
2020 |
Proposed |
Source: Platts Powervision, data accurate as of September 2015. |
2.7.
3.
3.1.
3.1.1. ECONOMIC ADVANTAGE
3.1.1.1.
3.1.1.2.
(A) Electricity price forecasts
(B) Operational assumptions
(C) The IRR of the project
3.1.1.3.
(A) The Economic Study
(B) Further clarifications
3.2.
3.2.1. POSITION ON THE OBJECTIVE OF COMMON INTEREST
3.2.2. POSITION ON THE NECESSITY OF THE MEASURE
3.2.3. POSITION ON THE PROPORTIONALITY OF THE MEASURE
3.2.4. POSITION ON THE EFFECT OF THE MEASURE ON THE INTERNAL MARKET
Site (country) |
Delays (years) |
Status |
||
Kudankulam — 1 (India) |
+5,8 |
completed |
||
Kudankulam — 2 (India) |
+7,0 |
ongoing |
||
Novovoronezh II.-1 (Russia) |
+1,5 |
completed |
||
Novovoronezh II.-2 (Russia) |
+2,5 |
ongoing |
||
Leningrad II.-1 (Russia) |
+2,0 |
ongoing |
||
Leningrad II.-2 (Russia) |
+2,5 |
ongoing |
||
|
|
Austria |
Slovakia |
Romania |
Croatia |
Serbia |
Ukraine (*2) |
Slovenia (*3) |
Total |
2015 |
600 |
800 |
1 000 |
1 200 |
1 000 |
450 |
0 |
5 050 |
2016 |
720 |
1 040 |
1 080 |
1 360 |
920 |
450 |
400 |
5 970 |
2017 |
840 |
1 280 |
1 160 |
1 520 |
840 |
450 |
800 |
6 890 |
2018 |
960 |
1 520 |
1 240 |
1 680 |
760 |
450 |
1 200 |
7 810 |
2019 |
1 080 |
1 760 |
1 320 |
1 840 |
680 |
450 |
1 600 |
8 730 |
2020 |
1 200 |
2 000 |
1 400 |
2 000 |
600 |
450 |
2 000 |
9 650 |
2021 |
1 200 |
2 000 |
1 400 |
2 000 |
600 |
450 |
2 000 |
9 650 |
… |
|
|
|
|
|
|
|
|
2030 |
1 200 |
2 000 |
1 400 |
2 000 |
600 |
450 |
2 000 |
9 650 |
|
Austria |
Slovakia |
Romania |
Croatia |
Serbia |
Ukraine (*4) |
Slovenia (*5) |
Total |
2015 |
600 |
800 |
1 000 |
1 200 |
1 000 |
450 |
0 |
5 050 |
2016 |
640 |
1 040 |
1 060 |
1 360 |
920 |
450 |
340 |
5 810 |
2017 |
680 |
1 280 |
1 120 |
1 520 |
840 |
450 |
680 |
6 570 |
2018 |
720 |
1 520 |
1 180 |
1 680 |
760 |
450 |
1 020 |
7 330 |
2019 |
760 |
1 760 |
1 240 |
1 840 |
680 |
450 |
1 360 |
8 090 |
2020 |
800 |
2 000 |
1 300 |
2 000 |
600 |
450 |
1 700 |
8 850 |
2021 |
800 |
2 000 |
1 300 |
2 000 |
600 |
450 |
1 700 |
8 850 |
… |
|
|
|
|
|
|
|
|
2030 |
800 |
2 000 |
1 300 |
2 000 |
600 |
450 |
1 700 |
8 850 |
3.3.
4.
4.1.
4.2.
4.2.1. COMMENTS AS REGARDS THE OBJECTIVE OF COMMON INTEREST
4.2.2. COMMENTS AS REGARDS THE APPROPRIATENESS OF THE MEASURE
4.2.3. COMMENTS AS REGARDS THE NECESSITY OF THE MEASURE AND THE INCENTIVE EFFECT
4.2.4. COMMENTS AS REGARDS THE PROPORTIONALITY OF THE MEASURE
4.2.5. COMMENTS AS REGARDS THE EFFECT OF THE MEASURE ON THE INTERNAL MARKET
4.3.
4.4.
4.5.
5.
5.1.
5.1.1. ECONOMIC ADVANTAGE
5.1.1.1.
|
December 2014 |
February 2017 |
Equity risk premium Damodaran |
8,84 |
8,05 |
Equity risk premium Fernandez |
8,30 |
8,10 |
Average equity risk premium |
8,57 |
8,08 |
INPUTS |
December 2014 |
February 2017 |
Risk free rate Hungary |
5,30 % |
3,45 % |
Equity risk premium Hungary |
8,57 % |
8,08 % |
Beta |
0,92 |
0,92 |
Return on equity |
13,19 % |
10,88 % |
Commercial debt risk premium on top of Hungarian Govt bond returns |
2,26 % |
2,26 % |
Before tax return on debt |
7,56 % |
5,71 % |
Corporate tax rate |
19 % |
19 % |
After tax return on debt |
6,12 % |
4,63 % |
Gearing (D/(D + E)) — Scenario I |
50 % |
50 % |
Gearing (D/(D + E)) — Scenario II |
40 % |
40 % |
WACC with gearing I |
9,66 % |
7,75 % |
WACC with gearing II |
10,36 % |
8,38 % |
WACC range |
9,66 -10,36 % |
7,75 -8,38 % |
Year |
Cost |
Green & Renewables |
Power |
Utilities (General) |
Generation and utilities (average) |
2014 |
Debt |
— |
5,90 % |
5,40 % |
5,65 % |
Equity |
— |
9,92 % |
9,84 % |
9,88 % |
|
β |
— |
1,09 |
1,08 |
|
|
2017 |
Debt |
4,41 % |
3,96 % |
3,96 % |
4,11 % |
Equity |
9,31 % |
9,82 % |
9,82 % |
9,65 % |
|
β |
1,01 |
1,08 |
1,08 |
|
(%) |
||||
Year |
Risk premium |
Developed Europe |
Hungary |
Difference |
2014 |
Country risk premium (bonds) |
0,99 |
2,56 |
1,57 |
Country risk premium (equity) |
1,48 |
3,84 |
2,36 |
|
2017 |
Country risk premium (bonds) |
1,06 |
1,92 |
0,86 |
Country risk premium (equity) |
1,30 |
2,36 |
1,06 |
(%) |
||||||
Year |
Cost |
D/ (D + E) |
Green & Renewables |
Power |
Utilities (General) |
Generation and utilities (average) |
2014 |
Debt pre-tax |
|
|
7,47 |
6,97 |
7,22 |
Debt post-tax |
|
|
6,05 |
5,65 |
5,85 |
|
Equity |
|
|
12,50 |
12,40 |
12,45 |
|
WACC |
50 |
|
9,28 |
9,02 |
9,15 |
|
WACC |
40 |
|
9,92 |
9,70 |
9,81 |
|
2017 |
Debt pre-tax |
|
5,27 |
4,82 |
4,82 |
4,97 |
Debt post-tax |
|
4,27 |
3,91 |
3,91 |
4,03 |
|
Equity |
|
10,38 |
10,97 |
10,97 |
10,77 |
|
WACC |
50 |
7,32 |
7,44 |
7,44 |
7,40 |
|
WACC |
40 |
7,93 |
8,15 |
8,14 |
8,07 |
(%) |
||
|
December 2014 |
February 2017 |
Bottom-up approach |
9,66 -10,36 |
7,75 -8,38 |
Benchmarking approach |
9,15 -9,81 |
7,40 -8,07 |
Overall range |
9,15 -10,36 |
7,40 -8,38 |
Midpoint |
9,76 |
7,89 |
5.1.1.2.
(%) |
||
|
December 2014 |
February 2017 |
Range |
8,20 -9,36 |
6,79 -7,90 |
Midpoint |
8,79 |
7,35 |
5.1.1.3.
5.1.1.4.
(%) |
||
|
December 2014 |
February 2017 |
WACC range |
9,15 -10,36 |
7,40 -8,35 |
IRR range |
8,20 -9,36 |
6,79 -7,90 |
WACC midpoint |
9,76 |
7,88 |
IRR central value |
8,79 |
7,35 |
Percentage of IRR-simulated cases when IRR |
85 |
55 |