European go ahead for Hinkley C - EU Commissioners vote 16 to 5 in favour

Approval today with amendments of the strike price deal means £1bn electrical contract can be awarded and nuclear power station project can move ahead.

The Hinkley site

Construction of Hinkley Point C nuclear power station can move ahead after EU commissioners voted in favour of the UK's plans for the new £16bn investment under slightly revised terms that include requiring EDF to pay back any excess profits to government and increasing the state guarantee that it pays to Treasury.  

The commission has been investigating since December as to whether an agreement that involved the UK government making up the difference in the price of electricity produced the station should it fall below 92.50/MWh minimum level constituted state aid.

Antoine Colombani, commission spokesman for competition and for vice-president Joaquin Almunia is reported to have said last month: "Our discussions with the UK authorities have led to an agreement. On this basis, vice-president Almunia will propose to the college of commissioners to take a positive decision in this case. In principle a decision should be taken within this mandate.”

The approval from Europe means EDF could announce the winner of the £1bn Hinkley Point C main electrical contract, which had been put on hold until the outcome of a European Commission inquiry. The power company had also said it would not be announcing any other contract wins for the UK’s first nuclear plant for 20 years, until the EC report.

A spokesperson for EDF Energy said in September: "Confirmation that vice-president Almunia recommends that the College of Commissioners approve the agreement on Hinkley Point C is another positive step forward for this vital project.

"The process to gain approval continues in line with the expected timetable.

 This agreement between the UK Government and EDF for the first new nuclear power station in Britain since 1995 is fair and balanced for consumers and investors alike.

"The State Aid investigation has been rigorous, robust and thorough and we expect that the College of Commissioners will recognise this.

"Hinkley Point C is an important project which will deliver Europe-wide objectives, offering the prospect of reliable, secure and low carbon electricity for many decades to come as well as boosting jobs and skills.”

Aim of the government’s deal with EDF was to remove the last remaining doubts of investors and kick start construction with the intention that the plant would be commissioned and generating electricity by 2023. This would be just in time to fill in the gap in energy generation created when the oldest advanced gas cooled reactors, Hinkley Point B and Hunterston face being taken off line as they near the end of their lives.

The UK and French governments have been working together to persuade the commission that the price agreement is within the rules but there have been concerns that the Commission could require a shorter contract or set conditions on the loan guarantee which might make the project unfinanceable.

In September Government announced £2.8M funding to prepare Somerset’s roads and railways for construction of the new nuclear station.

The £16bn Hinkley Point C plant will use two reactors of the European Pressurised Reactor design, generating a total of 3.2MW. They will be the fifth and sixth in the world: one is under construction in Finland one in France – where in both cases there have been delays in construction – and two in China.

A deal for Hinkley is expected to kick start progress on the UK’s three other planned nuclear plants at Wylfa, Sellafield (Moorside) and Sizewell C.

EDF’s four UK nuclear power plants at Heysham and Hartlepool have been shut down while problems while investigated, removing 25% of the UK’s nuclear capacity from the grid.

The unplanned closures and concerns about reliability of Russian Gas supplies have prompted National Grid to instigate moves to bring mothballed gas plant back into action and encourage energy intensive businesses to cut their usage at peak times.

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