Hinkley Point C nuclear subsidy plan queried by European commission

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Source: Guardian

Officials promise to investigate, saying they doubt claims of market failure and fear UK will start a 'subsidy race'

The European commission has opened an in-depth investigation into UK plans to subsidise the construction and operation of Hinkley Point C nuclear power station in Somerset.

It expressed doubts on Wednesday that British ministers could justify a system under which, it says, EDF could receive £17bn of public money.

The investigation was expected but the strong tone of the announcement clearly indicates the commission is highly sceptical and could yet derail a key part of the British government's energy policy.

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Read more: http://www.theguardian.com/business/2013/dec/18/hinkley-point-c-nuclear-subsidy-european-commission

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1. BBC: "Ineos said it had recently agreed a price of £37.94 (45 euros) per Mwh in France itself."

http://www.bbc.co.uk/news/business-25431160

Europe launches probe into Hinkley Point nuclear plan

18 December 2013 Last updated at 09:46 ET

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Too expensive?

As well as the debate about whether the UK should build any new nuclear plants at all, questions have been raised about the minimum price EDF will be paid for electricity produced at Hinkley Point.

It is scheduled to start producing power in 2023, and the government has guaranteed a price of £92.50 per megawatt hour (Mwh), regardless of what the current market price is at the time.

Earlier this week Ineos, one of the UK's biggest energy consumers, warned that the terms of the Hinkley deal made the power too expensive.

Ineos said it had recently agreed a price of £37.94 (45 euros) per Mwh in France itself.

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2. World Nuclear Industry Status Report

http://www.worldnuclearreport.org/European-Commission-State-Aid.html

European Commission State Aid Investigation Into UK Nuclear New Build

Wednesday 18 December 2013

The European Commission (EC) competition directorate on 18 December 2013 announced a formal investigation into whether the UK Government’s nuclear agreement with the EDF Group and partners for new nuclear reactors violates EU state aid rules.

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EDF and partners will be guaranteed a minimum price of £92.50 (USD150) for each megawatt hour (MWh) of electricity generated over 35 years; the difference between this so-called ’strike-price’ and the considerably lower wholesale market price for electricity will be funded by a nuclear levy on UK household energy bills. The average UK electricity price 2010-2013 was £50. The French and Chinese consortium will also benefit from a UK Treasury loan guarantee of £10 billion towards the cost of constructing the Hinkley EPR’s, the current estimate being £16 billion. No details on the terms of these loan guarantees, as well as other financial details of the agreement, have been disclosed.

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The EU Commission will likely make an initial ruling in early 2014, but a follow on broader investigation could last into 2015.

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During the past years there have been charges that the UK Government was preparing to subsidise new nuclear power projects despite denials from ministers. The agreement is seen by some analysts as giving nuclear power state-aided competitive advantage in cross border trade over and above renewable energy technologies, which are cheaper and quicker to install, threatening to directly contradict EU competition and internal market policy and law.

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3. Similar point raised on The Grist

Are Brits going to get screwed by pricey nuclear power?

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4. Related: Areva wants to raid French decommissioning funds to pay for UK reactors

From http://www.democraticunderground.com/112760224

Areva wants to raid Fr. nuke decommissioning funds to pay for UK reactors
They can't afford to borrow money on the market because they have credit rating that's in the toilet.

Areva may use French fund to help pay for UK nuclear plant - paper
PARIS Mon Dec 16, 2013 12:48pm GMT

(Reuters) - Areva is in talks with the French government to release some funds set aside for dismantling its nuclear installations in France to help the company finance a new British nuclear reactor, a newspaper reported.

Britain signed a deal with France's state-owned utility EDF in October to build a 16-billion pound nuclear power plant at Hinkley Point in southwest Britain, the first new plant in Europe since the Fukushima disaster.

State-owned Areva is taking a 10 percent stake in the consortium that will build the facility, which also includes EDF's Chinese partners China General Nuclear Corporation (CGN) and China National Nuclear Corporation (CNNC).

Areva wants to ensure the British nuclear project will not impact its debt, which is rated BBB- by Standard and Poors, one notch above "junk" territory. Its debt-to-equity ratio stood at 1.15 at the end of June, according to Thomson Reuters data.

It will need 500 million pounds to finance its share ...

http://uk.reuters.com/article/2013/12/16/uk-areva-hinkleypoint-funds-idUKBRE9BF0KS20131216