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'Illegal UK state aid' probe hits nuclear plans

Paul Brown

14th December 2013

An EU investigation into the UK's financial support for new nuclear power stations is dividing Europe, with critics saying London is flouting EU rules by offering illegal subsidies to EDF at Hinkley Point in Somerset. Paul Brown reports.

Britain's solar industry can deliver the same energy production as Hinkley C within 24 months at comparable cost.

A full-scale investigation is being launched into whether Britain's deal with French nuclear giant EDF to build new stations at Hinkley Point in the west of England, is illegal state aid.

The investigation by the European Commission delays any expansion of the industry for at least a year and may permanently damage its prospects.

Nuclear subsidies have never before been looked at in Europe, since they pre-date existing EU policy on competition. However, Germany, which is phasing out nuclear power in favour of renewables following the Fukushima accident, believes the UK's nuclear subsidy is incompatible with EU policy.

Guaranteed price

The UK argues that a guaranteed price for electricity over 35 years, plus £10 billion (US $16.36 bn) in loan guarantees for building the station, and insurance cover in case of accident, do not constitute subsidies beyond what would be available to other low carbon forms of generation, and are therefore permissible.

Tom Burke, former advisor to Conservative environment minister John Gummer, asks why, if there is no public subsidy, the Government needs to apply to Brussels for state aid clearance for this deal.

But the UK Department of Energy and Climate Change counters: "The Commission is aware of our timetable for implementation. We are confident that the case we have put forward is robust and consistent with state aid rules." It expects to receive clearance by mid-2014.

Objections to the deal are expected to be numerous, however, and an investigation could take far longer than that. If the decision goes in favour of the UK it will be a serious blow to the renewable industry, so supporters of wind, solar, wave, tidal and bio-gas technologies are all likely to submit objections.

Solar - cheaper, quicker, cleaner

Mark Turner of Lightsource Renewable Energy, has written to Prime Minister David Cameron to point out that Britain's solar industry can deliver the same energy production as Hinkley C within 24 months at comparable cost.

Hinkley won't be able to generate for the ten years it would take to build the plant. Solar power, on the other hand, could provide energy security quickly, reduce electricity bills and protect the environment at the same time, he said.

Before the last election all political parties said that nuclear power stations would be built only if they could compete with other forms of generation without subsidy. The Government then agreed to pay EDF  £92.50 per megawatt hour over 35 years -double the existing price of electricity.

Two stations of the same EPR design as Hinkley are being built in Finland and France. They are both about seven years late and construction budgets have already doubled.

Paul Brown writes for the Climate News Network.



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