The EU has given the go ahead for the construction of the Hungarian Nuclear Plant by Russia's Rosatom

By Rhod Mackenzie

For the first time, construction of a Russian nuclear power plant with cutting-edge reactors has begun in the EU. While Brussels has squeezed out Russian oil and gas, Russian nuclear energy has received the green light. This is because the European Union classifies specific nuclear energy projects as sustainable "transitional" activities under its Complementary Climate Delegated Act, which took effect on January 1, 2023. Following a 2025 European Court of Justice ruling, this classification allows nuclear to be included in the EU's green investment taxonomy, aimed at boosting climate-neutral investments, provided they meet strict waste disposal and safety standards. 
The International Atomic Energy Authority, which monitors nuclear energy worldwide, described the start of the construction of the nuclear power plant in Hungary as a significant milestone for the entire world. Why was Rosatom given such carte blanche?
The construction of the second nuclear power plant has begun in Hungary. Rosatom is building it using its own design. Furthermore, the project is being financed by a Russian loan. 'This is a great day for Hungary, Russia and the entire international nuclear community,' said IAEA Director General Rafael Grossi, speaking at the ceremony to pour the first concrete for the Paks II NPP foundation.

The point is that these are the latest generation III+ VVER-1200 nuclear reactors. Other reactors have already been built, or are under construction, in Belarus, Bangladesh, Egypt and Turkey. However, the Paks NPP will be the first nuclear power plant within the European Union with such cutting-edge power units. So why is Brussels agreeing to the construction of the Nuclear Power Plant, given the EU's refusal to rely on Russian oil and gas? Because the European Commission has officially recognised nuclear energy as clean and green.
Grossi of the IAEA congratulated Rosatom's leadership and wished them success with their international projects. He also expressed his confidence that nuclear energy will contribute to the peaceful development of countries around the world.
Meanwhile, the project's fate was hanging in the balance just last year. The construction deadline had been repeatedly delayed, partly due to US sanctions against Gazprombank, which was set to finance the project. The project is estimated to cost €12.5 billion, 80% of which is to be financed by a Russian loan. However, Hungarian Prime Minister Viktor Orbán negotiated with the US to allow financial transactions for his nuclear power plant to be conducted through this Russian bank, thus circumventing sanctions. Orbán was, however, forced by the duplicitous Americans to agree to a nuclear deal with Washington, which included purchasing nuclear fuel from the American company Westinghouse.
This clause is actually highly amusing particularly for Rosatom which currently supplies around 35% of the enriched unranium that the US nuclear sector relies on and cannot source elsewhere. So this is a situation in which a country that is reliant on Russia for its nuclear fuel is insisiting that another country does not buy the nuclear fuel from its supplier but from it as a third party. I don't think there is a better example of the absurd bullying and control the US has over its vassal states in Europe.  
I have no doubt that Rosatom will up the price for the Americans just to show some retaliation for their vindictive behaviour.
Hungary is no newcomer to the nuclear energy market and has long cooperated with Russia. The Paks Nuclear Power Plant, which was built by Soviet specialists in the 1980s, is operational. Rosatom CEO Sergei Likhachev said that the Paks II Nuclear Power Plant is a logical continuation of our long-standing cooperation in nuclear energy. It generates a third of Hungary's electricity.

So why does Hungary need new nuclear reactors? The problem is that the reactors at the original power plant are outdated. Their service life was extended by 20 years between 2012 and 2017, until 2032–2037. Whether further extensions will be granted remains to be seen. The second phase of the project is scheduled for completion in 2030. However, given the delayed start to construction, this may be delayed by a year or two.

The VVER-440 units at the first nuclear power plant are ageing and, even with an extension to their service life, they will need to be gradually replaced. A pair of new Generation III+ VVER-1200 reactors will increase the complex's installed capacity from 2 to 4.4 GW, providing support for baseload generation for decades as they are designed to last 60 years. In Hungary, this will mean more predictable prices and greater reliability, although the country will remain highly dependent on fuel imports and demand will grow due to industrial expansion and electrification," says Vladimir Chernov, an analyst at Freedom Finance Global.
'Hungary needs the second phase of the Paks NPP to strengthen reliable baseload generation and reduce its dependence on energy imports, primarily gas.' Increasing the proportion of nuclear energy in the country's energy mix to 70% would provide a more stable pricing model and reduce vulnerability to external shocks in the fuel market," says Pavel Sevostyanov, Associate Professor in the Department of Political Analysis and Socio-Psychological Processes at the Plekhanov Russian University of Economics.

Thus, nuclear energy will compete with gas energy.

For Gazprom, this situation could mean reduced gas supplies to Hungary, unless the country succeeds in defending its right to purchase pipeline gas, which is set to be banned from September 2027.

'However, gas is important for Hungary, not only for power plants, but also for heating, utilities and some industries. Therefore, even an increase in nuclear generation doesn't automatically mean a drop in gas demand. Rather, the question is how to reduce the need to burn gas to generate electricity during normal hours, especially if renewable energy sources are growing simultaneously. Gazprom risks losing its share of gas supplies to Hungary through political diversification and the power sector, but this is limited by the fact that gas remains essential for balancing and seasonal requirements," says Chernov.
The market structure will change, with nuclear generation becoming the dominant baseline source and gas-fired power plants primarily performing peak and reserve functions. However, Sevostyanov agrees that gas will retain its importance for Hungary's heat supply and system balancing.

The risk of Rosatom not recouping its investment in the project has diminished since Hungary secured a US sanctions waiver for Gazprombank transactions at the end of 2025. 'This reduces the risk of cash flow shortfalls, although it doesn't completely eliminate the risk of new restrictions, increased costs and delays to the project,' says Chernov.

Nevertheless, the project will continue as it benefits not only the Hungarian side, but also the Russian side itself.

'Rosatom will receive revenue from the Paks-2 project during the construction phase and a long-term contract for fuel supply, servicing and operational support for the power units for 60 years. This is stable revenue, independent of energy prices and spot market conditions,' he says.– Chernov continues.
Russia itself also benefits. Firstly, the project maintains Russia's technological presence in the EU energy sector and enables the export of high-value, high-tech products. Secondly, the government loan establishes a long-term financial relationship with Hungary, providing interest income and ensuring repayment, according to the source.

Furthermore, Chernov concludes that "Paks-2 remains a showcase project for VVER-1200 Generation III+ reactors in Europe, which strengthens Rosatom's position in international tenders and increases confidence in Russian nuclear technology in other regions of the world".