Britain gets green light for nuclear plant 240km from Ireland

The European Commission has approved a financing plan for the construction of two nuclear power plants in southwest England, effectively giving a green light to Britain to begin work on a new nuclear power plant in Somerset, 240km (150 miles) from the Irish coast.

In what is likely to be one of the final decisions by the outgoing European Commission during its current tenure, the EU's executive arm ruled today that Britain could give French company EDF a guaranteed price of £92.50 per megawatt-hour for 35 years, plus a state guarantee of £10 billion, to build the plant at Hinkley Point.

The so-called “strike price” is roughly twice the current wholesale price of power.

In an unusual move, the decision was put to a vote among the College of Commissioners this morning in Brussels, indicating a level of dissent within the European Commission over the issue. Irish Commissioner Maire Geoghegan-Quinn was in Turin for a bio-economy conference and was not present for the vote.

Speaking in Brussels this lunchtime, Competition Commissioner Joaquin Almunia said the decision was solely made on the grounds of state-aid rules, with Commissioners not discussing their “personal or political” views, though some sources suggested five Commissioners had voted against it.

Austria has confirmed it would bring an action to the European Court of Justice in relation to the decision, describing it as a “bad precedent”.

British chancellor of the exchequer George Osborne welcomed the decision as “excellent news”.

The nuclear plant, which will provide 7 per cent of Britain’s electricity generation, will produce 3.3 GW of electricity, the largest output produced by a single plant in the UK.

Earlier this year, Britain pulled out of a deal with Ireland which would have seen Ireland export wind energy to Britain. A memorandum of understanding had been signed between the Irish and British governments in January 2013, and a number of wind farms had been planned for the east of the country to facilitate the trade in wind. Britain granted permission for the development of the Hinkley plant in March 2013.

In August, the Court of Appeal in Britain ruled against An Taisce in a case brought by the environmental body on the proposed nuclear plant at Hinkley.

An Taisce had argued that the British government should have consulted with Ireland under the terms of the EIA (Environmental Impact Assessment), a European directive.

The Court of Appeal found against An Taisce’s claim, adding that it was not necessary to refer the case to the European Court of Justice.

In its decision published this morning, the European Commission said the financial aid being offered by Britain to the French company to build the plant was not in breach of state aid rules.

It noted that the UK had agreed to significantly modify the terms of the project financing. “As a result, the state aid provided will remain proportionate to the objective pursued, avoiding any undue distortions of competition in the Single Market. The modifications also reduce UK citizens’ financial contribution to the project.”

Greenpeace described the decision as a “sell-out to the nuclear industry at the expense of taxpayers and the environment”, claiming that the commission had, for the first time, cleared a plan for taxpayers to heavily subsidise the construction of a nuclear power plant in the EU.

The competition clearance will be a boost to the British government, which has signalled its intention to significantly increase investment in nuclear energy over the coming years.

In the announcement of its decision, the EU’s competition division notes that EU member states are free to determine their energy mix. “The UK has decided to promote nuclear energy and this decision is within its national competence. However, when public money is spent to support companies, the commission has the duty to verify that this is done in line with the EU state aid rules, which aim to preserve competition in the single market.”

The construction of the plant is expected to cost in the region of £24.5 billion pounds (€30 billion). Operations are scheduled to begin in 2023 and the plant will have an operational lifetime of about 60 years.

This article was edited on October 9th to correct a factual error.