23rd Sep 2021

EU lets UK subsidise nuclear power plant

  • Austria will challenge the 'bad precedent' in the EU court (Photo: Nicholas Sideras)

The European Commission is allowing the UK to subsidise the construction of a nuclear power plant which is to account for 7 percent of the country's electricity needs.

The UK has revised its scheme in such a way that the subsidies are “in line with EU state aid rules”.

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The €17 billion plant, Hinkley Point C, is to be built in Somerset in south-west England, at the site of its sister plants Hinkley Point A and B. It should start operating in 2023, for 60 years.

The decision is controversial.

When the commission started its investigation in December last year, it flagged up possible illegal state aid. “In particular, the commission has doubts that the project suffers from a genuine market failure”, a press release read.

But competition commissioner Joaquin Almunia said in a press conference on Wednesday (8 October) the UK has convinced Brussels that state aid is needed for the construction to go ahead.

“There is market failure here”, he said, or, in other words, the plant could not be built without state support.

The investigation was not about potential ecological or health risks, but purely on the legality of state aid.

Member states are free to choose their own “energy mix” and if the UK wants to use nuclear power plants, it can, so long as other EU rules are followed.

However, those opposed to the plan say state subsidies for energy production should be reserved to renewable energies such as wind and solar power.

“This precedent would have potentially massive implications for the EU energy market and the goal to boost the share of clean, safe and home-grown renewable energies”, said Green MEP Rebecca Harms in a press release.

Almunia said the decision “will not create a new precedent” for other plans for subsidised nuclear power.

But despite his statement, this is exactly what some member states which are more vocally anti-nuclear, such as Austria, believe.

In a statement released on Wednesday, the Austrian chancellor and vice-chancellor called Hinkley Point a “bad precedent”, and announced that Austria “will not accept” the decision.

Austria is to take the commission to the European Court of Justice, as threatened earlier on Sunday, when first signs of the commission's green light emerged.

For his part, Almunia had already agreed to allow the plan in September, but needed support from the other commissioners.

The decision was not unanimous and the Austrian commissioner was one of those who voted against it.

The approval allows Britain to provide a guaranteed price for electricity generated by the power plant, which will be built by French company EDF.

The guaranteed price is £92.50, or €117.47, per megawatt hour. This is almost twice as high as the current market price.

According to Almunia, one of the positive changes in the British plan is that if the venture makes more money than expected, these profits “will be shared with UK consumers and taxpayers”.

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