Comment hints at Hinkley Point C approval

Tuesday, 23 September 2014

How Hinkley Point C could look (Image: EDF Energy)

 
Statements by a European Commission spokesman indicate the UK's Hinkley Point C nuclear power plant project will be approved under state aid rules.

Talking to the Guardian newspaper a spokesman for Competition Commissioner Joaquin Almunia said he would "propose to the college of commissioners to take a positive decision and in principle the decision should be taken during this mandate of the Commission in October." The EC did not immediately respond to requests for confirmation from World Nuclear News.

Hinkley Point C is the flagship of Britain's energy policy, and along with other low-carbon options is to be financially supported by the country's new contract for difference (CfD) scheme. This will see the government top up a generator's market-based income to a certain amount per MWh - while the company must pay back if the market price is higher.

These CfD arrangements apply to all low-carbon technologies, but the inclusion of nuclear power attracted the attention of the European Commission: rules exist that allow state aid for renewables, but there is no such rule for nuclear power and so support for nuclear projects must be agreed on a case-by-case basis. The investigation into whether Hinkley Point C can be part of the CfD scheme began in December 2013 and is expected to conclude before the appointment of new European Commissioners in November.

EDF Energy is leading the project. It said: "Confirmation that Vice-President Almunia recommends that the College of Commissioners approve the agreement on Hinkley Point C is another positive step forward for this vital project. The process to gain approval continues in line with the expected timetable."

"Hinkley Point C is an important project," said EDF Energy, "which will deliver Europe-wide objectives, offering the prospect of reliable, secure and low-carbon electricity for many decades to come as well as boosting jobs and skills." 

"It is a very positive step forward for the industry to have that positive recommendation from the Competition Commissioner," Keith Parker, chief executive of the UK's Nuclear Industry Association, told World Nuclear News.

"We expect that the full, final decision should be made within the term of this commission which ends at the end of October, which is the timetable that we were anticipating initially. I'm sure that once that decision is made and it's confirmed then that will enable EDF to move forward towards a final investment decision and that will be galvanizing for the nuclear industry, particularly for the supply chain which has been waiting for movement of this kind."

Investigation

The specifics of the CfD proposed for Hinkley Point C would guarantee income of £92.50 per MWh generated by the plant (or £89.50 if a further new plant is built at Sizewell) for some 35 years, while the project has also been offered loan guarantees by the UK government.

On opening its investigation in December last year the European Commision sent a 70-page letter to the British government highlighting its specific concerns and inviting the country to support its case in these areas. They included doubts on whether nuclear investment could be justified as a "service of general economic interest" and whether Hinkley Point's deal might not "avoid overcompensation". The EC had doubts on "the structure of the CfD for nuclear which, by its design, duration and scope, has the potential for distorting competitive conditions" and it also was not convinced "whether the combination of aid measures, and in particular of a CfD with inflation indexation and a credit guarantee, is proportional to the potential benefits."

Nevertheless, the use of the term 'positive decision' by Almunia's spokesman - rather than the other possibilities, a 'conditional decision' or a 'negative decision' - indicates that the CfD could be approved without significant revision.

When officially published, Almunia's recommendation must be adopted by a decision of the entire college of 28 commissioners. This is expected under the presidency of José Manuel Barroso, before he and the other commissioners are replaced in November.

Researched and written
by World Nuclear News