The European commission on Wednesday gave Britain the green light for a huge government subsidy that will open the way for the first atomic power stations to be built for nearly 20 years.
The ruling was welcomed by ministers and the nuclear industry but Austria threatened legal action against it, while consumer champions said it could add more than £5bn a year to energy bills.
A majority of commissioners agreed Britain was not breaking state aid rules, overcoming the last regulatory hurdle for EDF Energy and its plan to construct Hinkley Point C in Somerset, south-west England.
EDF believes the project will cost £16bn but the EC claimed construction costs alone by the time the plant is built in 2023 will be more than £24bn with a further possible £10bn of contingency payments.
Joaquín Almunia, EC competition commissioner, had earlier overseen a heavily critical report on the subsidy arrangements drawn up by the UK Department of Energy and Climate Change (DECC).
Almunia argued that the EC could agree the measures in favour of Hinkley because the subsidy regime had been “significantly modified”, limiting distortions of competition in the European single market.
British ministers see new nuclear reactors as important to provide low carbon energy when many old atomic and coal-fired stations are nearing the end of their lives.
The subsidy arrangements guarantee the French electricity generator will obtain £92.50 per megawatt hour over the 35-year life of the Hinkley plant.
This subsidy, twice the current price of electricity, will be paid out of customer bills and DECC claims it will represent a significant saving on alternatives such as gas, whose price is expected to rise even more sharply and which gives off significant carbon emissions.
Ed Davey, the energy and climate change secretary, said the EC decision was an important step on the road to Britain’s first new nuclear power station and a good deal for consumers.
“While there is much work still to do before a final contract can be signed, today’s announcement is a boost to our efforts to ensure Britain has secure, affordable low carbon electricity in the 2020s,” he said.
Hinkley Point C will be able to supply 7% of Britain’s electricity and could avoid about 9m tonnes of CO2 emissions a year being released by fossil fuel-generated power.
But Austrian chancellor, Werner Faymann, said Hinkley set a “bad precedent” because guaranteed payments had previously been reserved for renewable forms of energy such as wind and solar.
He said Austria was opposing the commission decision on economic and environmental grounds, saying nuclear power was not a sustainable form of energy, was a mature technology and was not an option for combating climate change.
Nick Butler, a former No 10 energy adviser, said the whole subsidy arrangement was a mistake that would punish consumers and should be investigated by parliament’s public accounts committee.
“The deal will go down in history, alongside the privatisation of the Royal Mail, as an example of the inability of the British government – ministers and civil servants alike – to negotiate complex commercial deals,” he wrote in a blog for the FT.com.
Greenpeace said the EC move was a world record sellout to the nuclear industry at the expense of taxpayers and the environment.
“It’s such a distortion of competition rules that the commission has left itself exposed to legal challenges,” said Greenpeace EU legal adviser Andrea Carta.
Guy Newey of independent energy supplier, OVO Energy, said it would push up people’s bills for decades while Mark Todd, director of independent price comparison site energyhelpline, said: “The EU’s go-ahead for the Hinkley Point C nuclear plant could see UK homes collectively foot the bill for an additional £5.2bn per year on top of their current electricity costs.”
But Lord Hutton of Furness, chairman of the British Nuclear Industry Association, said it was an important step in securing Britain’s home-grown low-carbon electricity generation while adding jobs and prosperity to the economy.
Horizon Nuclear Power, owned by Toshiba of Japan and which wants to build new stations at Wylfa in Wales and Oldbury in Gloucestershire, said the EC move was “a huge boost”.
theguardian.com
The ruling was welcomed by ministers and the nuclear industry but Austria threatened legal action against it, while consumer champions said it could add more than £5bn a year to energy bills.
A majority of commissioners agreed Britain was not breaking state aid rules, overcoming the last regulatory hurdle for EDF Energy and its plan to construct Hinkley Point C in Somerset, south-west England.
EDF believes the project will cost £16bn but the EC claimed construction costs alone by the time the plant is built in 2023 will be more than £24bn with a further possible £10bn of contingency payments.
Joaquín Almunia, EC competition commissioner, had earlier overseen a heavily critical report on the subsidy arrangements drawn up by the UK Department of Energy and Climate Change (DECC).
Almunia argued that the EC could agree the measures in favour of Hinkley because the subsidy regime had been “significantly modified”, limiting distortions of competition in the European single market.
British ministers see new nuclear reactors as important to provide low carbon energy when many old atomic and coal-fired stations are nearing the end of their lives.
The subsidy arrangements guarantee the French electricity generator will obtain £92.50 per megawatt hour over the 35-year life of the Hinkley plant.
This subsidy, twice the current price of electricity, will be paid out of customer bills and DECC claims it will represent a significant saving on alternatives such as gas, whose price is expected to rise even more sharply and which gives off significant carbon emissions.
Ed Davey, the energy and climate change secretary, said the EC decision was an important step on the road to Britain’s first new nuclear power station and a good deal for consumers.
“While there is much work still to do before a final contract can be signed, today’s announcement is a boost to our efforts to ensure Britain has secure, affordable low carbon electricity in the 2020s,” he said.
Hinkley Point C will be able to supply 7% of Britain’s electricity and could avoid about 9m tonnes of CO2 emissions a year being released by fossil fuel-generated power.
But Austrian chancellor, Werner Faymann, said Hinkley set a “bad precedent” because guaranteed payments had previously been reserved for renewable forms of energy such as wind and solar.
He said Austria was opposing the commission decision on economic and environmental grounds, saying nuclear power was not a sustainable form of energy, was a mature technology and was not an option for combating climate change.
Nick Butler, a former No 10 energy adviser, said the whole subsidy arrangement was a mistake that would punish consumers and should be investigated by parliament’s public accounts committee.
“The deal will go down in history, alongside the privatisation of the Royal Mail, as an example of the inability of the British government – ministers and civil servants alike – to negotiate complex commercial deals,” he wrote in a blog for the FT.com.
Greenpeace said the EC move was a world record sellout to the nuclear industry at the expense of taxpayers and the environment.
“It’s such a distortion of competition rules that the commission has left itself exposed to legal challenges,” said Greenpeace EU legal adviser Andrea Carta.
Guy Newey of independent energy supplier, OVO Energy, said it would push up people’s bills for decades while Mark Todd, director of independent price comparison site energyhelpline, said: “The EU’s go-ahead for the Hinkley Point C nuclear plant could see UK homes collectively foot the bill for an additional £5.2bn per year on top of their current electricity costs.”
But Lord Hutton of Furness, chairman of the British Nuclear Industry Association, said it was an important step in securing Britain’s home-grown low-carbon electricity generation while adding jobs and prosperity to the economy.
Horizon Nuclear Power, owned by Toshiba of Japan and which wants to build new stations at Wylfa in Wales and Oldbury in Gloucestershire, said the EC move was “a huge boost”.
theguardian.com
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