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Brussels will “investigate in-depth” the Hinkley Point C subsidy package proposed by the UK government, the European Commission announced on Wednesday.
The Commission will consider whether state aid for new nuclear power is needed and if so, whether the level of support offered to EDF Energy in this case is justified.
The inflation-linked “strike price” for power of £92.50/MWh, the 35-year length of the contract and construction guarantees will all come under scrutiny.
Joaquin Almunia, EU competition commissioner, said the Commission “needs to investigate thoroughly” the deal’s impact on the UK and the EU internal energy markets.
The announcement coincided with the publication of updated rules on state support in energy for consultation. Despite the UK government’s efforts, these do not include specific guidelines on nuclear. That means the Commission will base its Hinkley decision on existing generic rules.
The package does include, for the first time, rules encouraging aid to interconnectors between countries. The Commission said national measures to encourage new power plants, such as the UK’s Capacity Market, will only be allowed if demand-side or storage measures “cannot address concerns about a sufficient flexible generation capacity”.
Almunia also emphasised the importance of exposing renewable generators to market prices as the technology matures, to avoid overcompensation.
Almunia said: “Well-designed public support measures can make a key contribution to achieving the EU’s energy and climate objectives for 2020 and strengthening cross-border energy flows, thus ensuring that European companies and consumers have access to more affordable energy. Our proposal of a new EU framework for state aid aims at supporting Member States’ efforts towards these goals while avoiding any waste of taxpayers’ money and distortions of competition in the EU internal market. I am looking forward to receiving feedback from stakeholders on this draft, so that the Commission can adopt revised guidelines in the first semester of 2014.”
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