Hungary held the ceremonial first concrete pour for the fifth reactor block of the Paks II nuclear power plant, a milestone in the construction of Hungary’s largest greenfield investment, on February 5.

At the ceremony, Minister of Foreign Affairs and Trade Peter Szijjarto called the Paks II project the "flagship" for the revitalisation of nuclear energy in Europe and said it was a guarantee of affordable utility bills and a step toward energy sovereignty.  

"Today marks an important milestone, and after this milestone, we will have even more important tasks ahead of us. The investment must be accelerated and completed as soon as possible," he said, as quoted by local media outlets.

The Hungarian government had decided to upgrade the Paks NPP at a time when nuclear energy was disparaged, but Szijjarto said critics had since acknowledged that nuclear energy was the cheapest and most environmentally friendly way to reliably generate large amounts of electricity.

Rafael Grossi, director general of the International Atomic Energy Agency (IAEA), opened the ceremony, highlighting the challenges the project has faced and noting that the new blocks could potentially be connected to the electricity grid within four to five years.

Rosatom CEO Aleksei Likhachev described the day as a celebration of Russian-Hungarian cooperation and emphasised the company’s preparedness to address future challenges. The project also involves other international partners, including the French company Framatome, which is contributing to control and instrumentation systems.

Hungary selected Russia’s state nuclear agency, Rosatom, in January 2014 to build two new VVER-1200 reactors, each with a capacity of 1,200 MW, without holding a public tender. The decision followed a meeting in Moscow between Prime Minister Viktor Orbán and Russian President Vladimir Putin, three months before the elections. The total cost of the project is estimated at €12.5bn, largely financed through a €10bn loan from Russia. 

In March 2017, the European Commission effectively cleared the project under EU state aid and public procurement rules; however, Rosatom failed to meet strict EU safety standards, and final permission from Hungarian authorities was granted in 2022.

Despite the war, Hungary proceeded with the project, arguing that new nuclear capacities are vital to the country’s long-term energy security. The government secured exemptions from EU sanctions on nuclear energy. In the meantime, and agreed with Rance-based Framatome on the supply of fuel rods to Paks I.

The EU Court of Justice annulled the 2017 European Commission decision authorising state aid for Paks II, but the case could still pose problems. The European Commission will now assess possible repayment obligations for Hungary and decide on next steps following a detailed review of the judgment. Hungary

Paks II will be the first nuclear power project in the European Union to use Russian-designed VVER-1200 technology. The two new units are intended to replace the four existing reactors at the Paks plant, each with a capacity of 500 MW, which were built in the 1980s and are expected to be decommissioned in the late 2030s. Hungary is also preparing to extend the operating lifetimes of these existing units between 2032 and 2037 to meet growing electricity needs.

The Hungarian government has said the Paks II project is essential to meet rising electricity demand, particularly as electrification and industrial consumption increase. Upon completion, nuclear energy is expected to account for around 70% of Hungary’s domestic electricity generation.

Projections indicate that once Paks II enters service, Hungary could briefly become a net exporter of electricity around 2030, with imports falling to just 1-2% of consumption. However, continued growth in demand is expected to push the country back into net import dependence in the 2030s and 2040s, potentially reaching up to 23% by 2050.