EU gives go ahead for state subsidies to new UK nuclear power plant – most are positive

The EU Commission has – contrary to a preliminary finding earlier this year – given its approval for the British government to hand over millions of pounds in state funding to aid the construction of the UK’s first new nuclear power station in nearly 30 years at Hinkley Point C.

EDWARD DAVEYEd Davey, British energy minister, said that new nuclear power stations like Hinkley will be vital in the next decade for Britain’s energy security as most of the country’s existing nuclear stations are due to close before 2023. New nuclear power stations will also be key to cutting the carbon emissions from Britain’s electricity industry in the UK’s future low carbon energy mix.

Hinkley will generate a stable source of clean power to nearly 6 million homes once it is up and running, and will provide 25,000 jobs during construction. UK companies could benefit from getting more than 50% of the work, and thousands of jobs are expected to go to local people.

The State aid case included both the proposed Contract for Difference, which provides the developer with an increased price certainty for the electricity generated by the plant, and the proposed UK Guarantee for the project, which will help unlock debt finance.

Last October’s agreement in principle with EDF, the developer, remains in place, and there has been further agreement to strengthen arrangements for benefits to be shared with consumers if the project comes in under budget, or if the project’s return exceeds a certain level.

This ensures that consumers won’t pay more than they have to whilst providing a reasonable return for the investors.

The Government and EDF are continuing to work together to finalise the Hinkley project, including the full terms of the Contract for Difference and the financing arrangements for the project, which includes support from the UK Guarantee. UK Guarantees are designed to facilitate the development of infrastructure that would otherwise find it difficult to obtain finance due to the current state of capital markets.

Energy and Climate Change Secretary Ed Davey said:
“This is an important next step on the road to Britain’s first new nuclear power station in a generation. While there is much work still to do before a final contract can be signed, this announcement is a boost to our efforts to ensure Britain has secure, affordable low carbon electricity in the 2020s.

“After a thorough, detailed and independent analysis of our proposed project with EDF, this decision shows the European Commission agrees that this is a good deal for consumers and enables us now to proceed to the next stage.”

Hinkley Point C represents the start of investment in a new fleet of nuclear power stations replacing old, polluting power plants and supporting a skilled, low-carbon future with increased energy security and resilience from a safe, reliable, home-grown source of electricity.

EDF Group and other investors will be responsible for funding the project, which will be paid for through energy bills like all other electricity supplies.

Building a new fleet of nuclear power stations could reduce household bills by around £95 in 2030. Moreover, for the first time ever, the operator of the plant will be responsible for the full costs of decommissioning and its share of the costs of waste management.

There was a good response from Energy UK. 

Hibbert_Knight_12.JPGAngela Knight, chief executive of Energy UK, said:

“A decision on Hinkley signals that at long last the much needed investment in new nuclear power stations can now start. This is an essential part of making sure the UK’s electricity supply for the future is secure.

“More power stations are needed to replace Britain’s ageing nuclear plants which currently supply a fifth of all the UK’s electricity.

“There is a significant cost attached to the big energy rebuilding programme currently underway. New build in wind, solar, biomass, nuclear  – or any other low carbon technology – will give us enough electricity to meet the country’s requirements while cutting carbon emissions.

“New power stations and new types of electricity generation all come at a significant cost to today’s and tomorrow’s consumers. Investing for energy that is always there at the flick of a switch must be balanced with affordability for all users and long contracts – such as Hinkley – make the end result fair for consumers and clear for investors.”

The CBI said it was a very positive thing for the UK. John Cridland, CBI director general, said:

“The European Commission’s green light for Hinkley Point is a significant milestone in the United Kingdom’s energy future.

“Hinkley should set the ball rolling for the UK’s nuclear new build programme, putting us on the right path to achieving a secure and sustainable energy mix.

“It represents a real opportunity for growth, with the potential to create tens of thousands of jobs for people – not just in the local community, but up and down the whole country.”

Horizon Nuclear Power has welcomed the announcement.

Alan Raymant, Chief Operating Officer at Horizon said:

“This ruling is a huge boost for the UK nuclear new build programme which demonstrates the robustness of the model the UK Government has put in place to bring forward low carbon investment and underlines the attractiveness of the UK market for new nuclear. As the next UK developer in line, we take great confidence from the decision.”

“We look forward to working with all parties, including the UK Government, as we continue to make strong progress towards delivering new clean, secure and affordable electricity for the UK.”

But SNP MP Mike Weir gave a slightly cautious note when he says that Hinkley could be a ‘massive cost to the taxpayers’.

He said: 

“The UK is about to build its first nuclear power plant in almost 20 years, at a massive cost to taxpayers.

Mike Weir MP Energy spokesperson“The UK government will be turning taxes into guaranteed profits for a nuclear power company. A report by Scottish and Southern Energy (SSE) has previously said the UK Government’s deal for the construction of two reactors at Hinkley would see increased energy bills for the next 35 years. 

“While Longannet faces discriminatory penalties of £40 million for annual transmission charges, EDF will benefit from up to £35 billion of subsidy for Hinkley C alone with a strike price almost double the wholesale electricity market price. Meanwhile, renewable energy is on a downward price curve, with developers competing for a budget of £300 million split across all renewable technologies which will support only very limited amounts of new capacity.

“Our abundant energy resources in Scotland have given us a fantastic opportunity to lead the way on renewable energy, which is why the SNP has set the ambitious target of generating the equivalent of 100% of electricity consumption from renewable sources by 2020 – the SNP Scottish Government is committed to tackling climate change and keeping energy bills low.”


Pictured is (r) Angela Knight, chief executive of Energy UK and (l) Mike Weir, SNP MP




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