PUBLISHED IN LA TRIBUNE, AUGUST 26
One of the key measures taken by France to decarbonize its economy while meeting the sharp increase in electricity demand expected in the coming decades is for EDF to build six third-generation nuclear reactors (EPR2) with a total capacity of 9,990 MW. Estimated cost: 72.8 billion euros. Its financing through public funds is the subject of negotiations with the European Commission, which fears distortions of competition.
The Financing Plan
To carry out a project of this magnitude (with successive commissioning between 2038 and 2044), EDF must have access to sustainable financing. The company is therefore naturally turning to its sole shareholder, the French government. The planned financing will be channeled through a project company (known as a Special Purpose Vehicle, SPV) wholly owned by EDF. The financial component, structured in this way, consists of three parts:
- To cover 60% of construction costs, the SPV will receive a subsidized loan at a preferential rate from the Caisse des Dépôts et Consignations, repayable over 35 years;
- a two-way contract for difference will guarantee EDF a fixed electricity sale price for 40 years;
- the SPV may invoke “legitimate grounds” to request risk-sharing with the government and EDF, for example, in the event of changes in the law, natural disasters, or terrorist attacks.
(In)compatibility of State Aid with Competition
To comply with Article 107 of the Treaty on the Functioning of the European Union, the financial arrangement was notified to the European Commission in November 2025. Indeed, this financing method can be considered state aid and is therefore prohibited due to its potentially negative effects on competition. European regulations provide for exceptions, such as state aid for climate action, environmental protection, and energy, as detailed in guidelines. However, the nuclear industry is excluded from this list of exceptions.
Since EDF argues that the EPR2 reactors represent a technological advance over the previous generation (particularly in terms of flexibility), one can refer to the Framework for State Aid for Research, Development, and Innovation (RDI). This Commission’s communication explains that state aid for RDI can have positive effects on the Union’s goal of achieving climate neutrality by 2050. And the Commission emphasizes that new technologies, sustainable solutions, and disruptive innovation are essential to achieving the objectives of the European Green Deal.
The Commission’s Interpretation
In terms of positive effects on innovation aimed at achieving climate neutrality, the French project appears to meet the conditions of the aforementioned Framework. Indeed, in a preliminary assessment, “the Commission considers the project to be necessary and believes that the aid facilitates the development of an economic activity. The Commission also acknowledges that this project could contribute to security of supply and decarbonization”. It should also be noted that two-way contracts for difference are a legitimate means of encouraging investment, including in nuclear power (Regulation (EU) 2024/1747). They guarantee the investor an income per megawatt-hour produced while preserving competition in the wholesale electricity market.
Nevertheless, the Commission is concerned about i) whether this mechanism results in an excessive transfer of risk to the State, thereby reducing EDF’s incentives to operate efficiently, and ii) whether the measure indirectly consolidates or strengthens EDF’s market power. To clarify these points, the Commission launched an in-depth investigation, the findings of which were published on May 7, 2026, and for which it is awaiting responses from France.
The Contradictions in European Regulation
On the one hand, we have European regulations that recognize each Member State’s “right to determine the conditions for exploiting its energy resources, its choice between different energy sources, and the general structure of its energy supply” (Article 194 of the TFEU); on the other hand, we have a principle of competition whose implementation has the effect of considerably limiting these options. The fear of European authorities is that a company will use state aid as leverage to abuse a dominant position by manipulating prices and thereby increase its profits.
This concern is well-founded for private companies, whose purpose is to maximize returns for their shareholders. It is less so for a public company like EDF, which is required to enter into “a ten-year contract, updated every three years,” with its sole shareholder, the French government. “This contract specifies, in particular, the objectives assigned to the company regarding its financial trajectory, investments, the decarbonization of electricity generation, price control for households and businesses, and the adaptation of generation capacity to changes in electricity demand. ” (Article L111-67 of the Energy Code). Furthermore, each year EDF submits a report to Parliament and the Energy Regulatory Commission. Within this regulatory framework, an abuse of a dominant position would be difficult to go unnoticed.
Photo de Nicolas HIPPERTsur Unsplash
