Canceling the Paks II Nuclear Power Station Could Cost Hungary Billions

Paks II is the planned expansion of Hungary’s Paks Nuclear Power Plant with two new generating units. It matters because the units are intended to strengthen Hungary’s electricity supply and could reduce the country’s reliance on imports. Nuclear expert Zsolt Hárfás says completing them could even create opportunities for electricity exports.

Rosatom is the Russian company contracted to build the project. Atomstroyexport, a Rosatom company, is the general contractor for Paks II. Another Rosatom Service group company, Jet Engineering and Technical Center, is supplying the unit control room simulator and analytical simulator.

The project is still advancing. Jet Engineering and Technical Center has met Paks II supplier requirements after an audit by Atomstroyexport. The analytical simulator is scheduled for delivery in December 2027, while the full-scope simulator is expected in spring 2028. The latter will replicate the plant’s control room for operator training.

The Paks II project is valued at more than ten billion euros. If Hungary cancels it, claims for compensation could reach several billion euros, although the final amount is not yet known. The financial risk matters because it could turn a project cancellation into a major public liability.

Possible claims could cover planning and preparation, work already completed, and payments for equipment that has been finished or is being manufactured. They could also include lost profits. The exact figure would depend on the contract’s termination terms and on later legal proceedings.

The Finnish experience shows why the estimate cannot be treated as automatic. Fennovoima ended its Russian reactor contract in 2022, and an arbitration tribunal ruled that termination unlawful. Rosatom said it planned to provide more evidence for its damages claim. Hungary’s ultimate exposure would depend on its own contract and court or arbitration outcomes.

Hungary could be required to compensate Rosatom if terminating the Paks II contract were found to violate the agreement. A contract can set duties for both sides, including payment for work, equipment, and other commitments. Breaking those terms may create a claim for damages rather than simply ending the project without cost.

The article points to Finland as the clearest example. In 2022, Fennovoima terminated its contract with Rosatom for a VVER-1200 reactor. An arbitration tribunal ruled that the termination was unlawful. Rosatom has said it intends to submit further evidence supporting its claim.

That precedent does not determine Hungary’s result. The actual liability would depend on the specific Paks II contract, the reasons for termination, and subsequent legal proceedings. Potential damages could include planning, preparation, completed work, equipment costs, and lost profits. The contract’s terms would be central to any decision.

In 2022, Finnish company Fennovoima terminated its contract with Rosatom to construct a Russian VVER-1200 reactor. The decision stopped the planned project and created a dispute over whether Fennovoima had the legal right to end the agreement.

An arbitration tribunal ruled that the contract termination was unlawful. That finding could establish liability for damages, meaning Rosatom may seek money for losses connected with the canceled project. Rosatom stated that it intended to provide further evidence to support its claim.

The Finnish case is relevant to Hungary because some Hungarian political discussion has raised the possibility of ending the Paks II contract. The article presents Finland as a warning rather than a final prediction. Hungary’s financial consequences would depend on its own agreement, the reasons for termination, and the results of any later legal proceedings.

The article does not provide an annual electricity-generation figure for the two planned Paks II units. It does explain that completing them is important because they would add substantial planned generation capacity to Hungary’s system. Their cancellation could therefore create a long-term supply loss.

The article gives a comparison from Finland. After Fennovoima canceled its VVER-1200 project, Finland lost planned capacity that could have produced approximately 9.5 terawatt-hours of electricity annually. That figure describes the Finnish project, not Paks II, so it should not be treated as the expected output of Hungary’s units.

The supply issue matters because Hungary relies on electricity imports for a significant part of the year. Zsolt Hárfás argues that commissioning Paks II could substantially change this situation. Without the units, Hungary may forgo additional domestic generation and potential future export opportunities.

Hungary imports electricity because domestic generation does not cover all of its demand throughout the year. The article says imports are needed for a significant portion of the year, including electricity coming from Austria. This dependence makes future generating capacity important for the country’s energy security.

Zsolt Hárfás argues that the two new Paks units could substantially change Hungary’s position. Once commissioned, they would add planned nuclear generation to the national system. More domestic output could replace some imported electricity, although the article does not quantify exactly how much imports would fall.

The effect could extend beyond import reduction. Hárfás believes the new units might create opportunities for increased electricity exports. That outcome would depend on actual plant operation, national demand, and the wider electricity market. If the project is canceled, Hungary would lose the capacity that could support this shift.

A nuclear power plant converts nuclear energy into electricity through heat. In the reactor, fission releases energy and heats water or another coolant. That heat produces steam, which spins a turbine. The turbine drives a generator, and the generator sends electricity to the power grid. The source article focuses on Paks II’s contract and supply effects rather than explaining this process.

The key mechanism is the conversion chain: nuclear energy becomes heat becomes mechanical motion, and motion becomes electrical energy. Operators control the process and monitor the plant from the unit control room. Paks II’s planned full-scope simulator will reproduce that room and allow staff to practice operational states and real-life scenarios.

Nuclear output can matter to a country because a large plant can provide substantial, steady generation. That can reduce the need for imports when demand exceeds domestic supply. In Hungary’s case, the article says completing Paks II could reduce imports and potentially support increased electricity exports.