EU approves Dutch state aid for Pallas

Friday, 26 July 2024

The government notified the Commission of its plan to support the Pallas project, which includes the construction of a reactor and a nuclear health centre in Petten.

The Pallas research reactor will replace the existing High Flux Reactor (HFR). The 45 MW HFR started operating in September 1960, since when its use has largely been shifted from nuclear materials testing to fundamental research and the production of medical radioisotopes. The reactor - operated by Nuclear Research and Consultancy Group (NRG) on behalf of the European Union's Joint Research Centre - has for a long time supplied about 60% of Europe's and 30% of the world's use of medical radioactive sources.

Pallas will be of the "tank-in-pool" type, with a thermal power of around 55 MW, and able to deploy its neutron flux more efficiently and effectively than the HFR.

The reactor and the nuclear health centre will also be used to conduct research, development and innovation activities both in the field of nuclear medicine and nuclear power technology.

Although funding has been allocated in the coming years for the construction of the Pallas reactor, the Dutch government has yet to make a final decision on its construction. It has said construction will be able to go ahead if the Dutch parliament does not object to the creation of a new state-owned company and if the European Commission approves the public investment.

Under the state aid, funding will take the form of loans and equity for a total amount of about EUR2 billion to a newly established company (NewCo) that will build and operate the reactor and the nuclear health centre. NewCo will result from the merger of the Foundation Preparation Pallas-reactor, set up by the Netherlands in 2013 to manage the preparatory phase of the project, and NRG.

The European Commission has now assessed the measure under EU state aid rules and found that: the measure is necessary and appropriate, as the Pallas project would not materialise without the public support; the aid is proportionate as it is limited to the minimum necessary based on a proven funding gap; and the Netherlands has put in place sufficient safeguards to ensure that the aid has a limited impact on competition and trade.

"This EUR2 billion measure enables the Netherlands to support a strategic project contributing to the securing of supply of essential medicines and to the development of breakthrough innovation in the field of nuclear technology to the benefit of European citizens," said Margrethe Vestager, executive vice-president in charge of competition policy at the EC. "Our assessment has confirmed that the measures proposed by the Dutch authorities will limit any possible distortions of competition triggered by the public support."

Today's decision follows a 2013 Commission decision approving aid to the preparatory phase of the Pallas project.

"This is good news, for us, for the Netherlands, but especially for the many patients with life-threatening diseases, such as cancer and cardiovascular diseases, who depend on medical isotopes," said NRG-Pallas CEO Bertholt Leeftink. "With the arrival of the new Pallas reactor, the production of medical isotopes and the innovation of new applications for the treatment of cancer, among other things, are guaranteed."

The Foundation Preparation Pallas-reactor applied in June 2022 to the Authority for Nuclear Safety and Radiation Protection (ANVS) for a permit to construct and operate the Pallas reactor. ANVS granted a construction licence in mid-February last year. Preparatory work on the foundations began in May 2023.

Peter Dijk, Pallas programme director, said: "We are very pleased with this good news. This means that we are entering the next phase of the construction project: the construction of the reactor and the associated buildings. At the moment, together with the contractor FCC Construcción, we are fully engaged in the preparations for this construction phase. The preparatory phase of the construction pit and the foundation is nearing its end and with the approval of the European Commission, we can continue with the Pallas programme."

The Foundation Preparation Pallas-reactor noted that its planned merger with NRG will start next quarter. It said the new merged foundation will be converted into a capital company in which the Ministry of Health, Welfare and Sport will be the sole shareholder.