The European Commission is close to concluding that Britain’s nuclear expansion programme at Hinkley Point breaches EU state aid rules and may have to be revised, a move that could lead to long delays and even cause the complex deal to unravel, according to national press reports this week.
The EU competition police are examining a string of subsidies tied to the Government’s £16bn agreement with French groups EDF and Areva as well as China’s General Nuclear Power to build two new generation EPR reactors. These would be the first reactors to be built in Britain since 1995, providing 7% of the UK’s electricity.
Sources in Brussels told the Daily Telegraph that the chief concern is a £10bn loan guarantee for the construction of the plants, insurance against a meltdown, help with decommissioning costs and the inflation-linked ‘strike price’ of £92.50 per megawatt hour for 35 years.
The investigation is being conducted by officials at the competition directorate. They are expected to issue an initial verdict in January, paving the way for a broader inquiry. Any decision requires backing by the ‘college’ of EU commissioners.
The team is looking at the broader shape of the Hinkley deal and whether state support on this scale is needed for the project to go ahead.
Günther Oettinger, the EU’s energy commissioner, warned last month that “35-year feed-in tariffs may be a problem”, adding that the EU might do better to invest more in wind and gas. He earlier described the UK nuclear deal as a throw-back to the “Soviet” era.
Any move to delay or unpick the deal could lead to a serious political showdown between London and Brussels, adding to the tense mood as Britain’s referendum on EU membership approaches.
