1. Conclusion and recommendation 1.1 The answer to the question of the Czech presidency is, in summary, in the current market design of the electricity market, nuclear energy cannot play a role in price stability. This is because the merit order applies in the current market design (see point 2.8). Only when the market design is adapted with substantial financial state aid, in addition to private financing, a situation of price stabilization by nuclear energy is possible. 1.2 The EESC advises the Czech presidency to open a structured dialogue at EU level with the aim of agreeing on a new market design for the electricity market that guarantees price stability. 2. Introductory notes 2.1 Prior to the Czech presidency of the Council of the EU (second half of 2022), this upcoming presidency asked the European Economic and Social Committee to prepare an exploratory opinion on the role of nuclear energy in the stability of EU energy prices. 2.2 The EESC is happy to comply with this request from the Czech presidency, as it offers the opportunity to provide a factual and unambiguous description of that role. 2.3 Achieving price stability is one of the preconditions for offering electricity customers, both businesses and consumers, certainty about their costs in the short and medium term. Stable power prices therefore play a crucial role for the performance of European businesses and the creation and maintenance of employment. 2.4 Price stability is also necessary for all companies, especially small and medium-sized companies, in order to be able to provide realistic quotations in a timely manner and to make realistic forecasts. 2.5 In order to be able to provide the answer to the Czech presidency as factual and unambiguous as possible, in this exploratory opinion we will not discuss other aspects that are also interesting, but which are not important within the phrasing of the question for this exploratory opinion. That means, first, that we do not interfere with the right of each Member State to make its own choices about how electricity is generated in its own country. And second, that we do NOT comment on the actual and possible advantages and disadvantages of nuclear energy. 2.6 The issue of security of supply also falls outside the scope of this exploratory opinion. This issue deserves its own opinion. But it is of course indisputable that in the current situation with a war in Europe in which gas and oil are used as geopolitical weapons, it is important to keep the existing power stations operational as much as possible and flexibility should be exercised with regard to the temporary use of fossil and low emission fuels. And as already mentioned, the Committee recognizes the right of each Member State to make its own choices about how electricity is generated in its own country. The Committee reiterates that it strongly supports what the European Commission writes in its REPowerEU plan: the challenge is rapidly reducing our dependence on Russian fossil fuels by fast forwarding the clean transition and joining forces to achieve a more resilient energy system and a true Energy union. 2.7 Although it is tempting to also discuss the level of energy prices, we do not do that, because the stability of the prices does not depend on the level of the price. Stability may or may not apply at any price level. 2.8 Some technical terms are explained here: Market design: the way in which the electricity price is determined in the market. Marginal costs: the amount by which total costs increase if a company produces one additional product. Spot market: a spot market is the market for the exchange of commodities, like electricity, on which transactions are carried out for immediate payment and prompt delivery. Merit order: the order of power plants based on the level of their marginal costs, starting with the lowest marginal costs and ending with the highest marginal costs. So, power plants with higher marginal costs are added until the demand is met. The order is: renewable energy, nuclear energy, coal, oil and gas. In today’s electricity market design, the last power plant from the merit order (mostly gas) sets the price with its marginal costs. 3. Answer to the question 3.1 Of course, every power plant plays a role in the electricity market. For example, it is clear that the recent failure of many of France’s nuclear power stations and the consequent need to import more electricity is reflected in the development of the price. But in this exploratory opinion we do not look at these more or less temporary situations, but at the structural side of the way in which the electricity market works. 3.2 We focus on the spot market, because it mainly determines the price that consumers have to pay. And, as mentioned, on the spot market the merit order is the market design. 3.3 The role of nuclear energy in the stability of EU energy prices depends on two variables, namely whether it concerns old or new nuclear power plants and whether it concerns the current market design or is it a new market design? So if you combine these variables, you get four different situations. 3.4 In order to give the clearest possible answer, it is therefore necessary to distinguish four different scenarios for these four different situations, namely the following: A : existing nuclear power plants in the existing market design B : existing nuclear power plants and a new market design C : new nuclear power plants in the existing market design D : new nuclear power plants and a new market design. 3.5 A: Existing nuclear power plants in the existing market design 3.5.1 In almost all Member States, electricity generated in current nuclear power plants does not and cannot play a role in the price stability of electricity. The reason for this is the current market design of the merit order, with the plant with the highest marginal costs as price setter (almost always gas, even in France). There is one exception in the EU: Sweden, due to their electricity mix (almost 60 % renewables — mainly hydropower — and about 30 % nuclear) (1). 3.6 B: Existing nuclear power plants and a new market design 3.6.1 In principle, it is conceivable that nuclear power plants then have a price-stabilizing effect — for example in a market design in which pricing is based on average costs and/ or nuclear power is out of the merit order. However, it is questionable what such a market should look like and how it should function. But in the UK, for example, a new model is now being implemented, namely to split the market into two segments: dispatchable power and non-dispatchable power. The dispatchable segment (mainly gas with residual coal and a little biomass) would follow the marginal pricing model, and the non-dispatchable would be paid on a full cost basis (some kind of regulated return on capital in the form of a Contract for Differences — which is where the UK has already gone with their new nuclear power station Hinkley Point C (2). This does mean that the state will have to subsidize the nuclear power stations concerned if the electricity price in the market is lower than the agreed amount based on the regulated return on capital. This means that such a new market design consists of two elements: a market segment in which the previous market design (= merit order based on marginal costs) applies and a second where there are de facto only contracts for differences. As a result, the electricity generated within the contracts for differences has a stable price and is thus reflected in a more stable price for the consumer. But the price for the consumer will still fluctuate, because a part of the electricity is still priced on the merit order. 3.7 C: New nuclear power plants in the existing market design 3.7.1 Nuclear power plants can have a stabilizing effect on prices if enough nuclear power plants are built so that nuclear power plants are regularly the last power plants in the merit order. This would mean that we would have to replace fossil power plants with nuclear power plants; so at least hundreds of new nuclear power plants in Europe! And: yes, then it would set the price, with a price level that — see Hinkley C — would be about twice as high as renewable electricity. However, due to marginal pricing, the inevitable consequence would be that the new nuclear power plants would not be able to finance themselves on the market, so they would need subsidies. 3.8 D: New nuclear power plants and a new market design 3.8.1 The nuclear power plants should be out of the merit order and under the cost (plus) system. The plus comes from the fact that next to government financial investments, the private sector needs to get on board to and have a fair RoI (Return on Investment), therefore the cost plus tariff (see also point 3.5.1). 4. Summary 4.1 The answer to the question of the Czech presidency is, in summary, in the current market design of the electricity market, nuclear energy cannot play a role in price stability. Only when the market design is adapted with substantial state aid, in addition to private financing, a situation of price stabilization by nuclear energy is possible. 4.2 Therefore the EESC advises the Czech presidency to open a structured dialogue at EU level with the aim of agreeing on a new market design for the electricity market that guarantees price stability.