nuclear-news

Probable illegality of Britain’s nuclear subsidy throws doubt on global nuclear industry

In the wider context the deal is important because the nuclear industry’s revival in democracies depends on it being classed as a low carbon generator, which can benefit from carbon credits and other subsidies in the same way as renewables. This has already been ruled out in most democratic countries outside Europe.

Without state aid the large capital expenditure needed to build nuclear plants is hard to find from the private sector, and the time it takes to build reactors makes the return on capital long-term. Two stations being built in Finland and France are both up to seven years late and construction budgets have already doubled. They are the same design as the reactors intended for Britain.

‘Illegal UK state aid’ probe hits nuclear plans Eco Business, 14 Dec 13, An EU investigation into the UK’s financial support for new nuclear power stations is dividing Europe, with critics saying London is flouting EU rules by offering illegal subsidies.A full-scale investigation is being launched into whether Britain’s deal with French nuclear giant EDF, backed with money from Chinese nuclear generators, to build new stations at Hinkley Point in the west of England, is illegal state aid.

The investigation by the European Commission is a serious blow to the nuclear industry in Europe and across the western world, because it delays any expansion of the industry for at least a year and may possibly permanently damage its prospects.

It is a test case because nuclear subsidies have never been looked at previously in Europe, since they pre-date existing EU policy on competition and so have never been challenged. However, countries like Germany, which have decided to phase out nuclear power in favour of renewables following the Fukushima accident, believe the UK’s nuclear subsidy is not compatible with EU policy.

Across Europe other critics of nuclear say that no new station has ever been built without state subsidies, and that since subsidies distort competition in electricity markets, they are therefore illegal in Europe……

Mark Turner, a director at the UK’s leading solar power generator, Lightsource Renewable Energy, has written to Prime Minister David Cameron to point out that Britain’s solar industry can deliver the same energy production at the planned Hinkley Point C within 24 months and at comparable cost.

Hinkley won’t be able to contribute to reducing dependence on fossil fuels for the ten years it would take to build the plant. Solar power, on the other hand, could provide energy security quickly, reduce electricity bills and protect the environment at the same time, he said.

One curious aspect of the saga is that the British Government pledged before the last election that nuclear power stations would be built only if they could compete with other forms of generation without subsidy. They then spent two years negotiating with EDF and agreed to pay £92.50 per megawatt hour for the electricity over 35 years, double the existing price of electricity.

UK gambles

The Government is therefore gambling that the price of electricity will double before the station starts up and that it will therefore not have to pay the subsidy. Among the issues the commission will be looking at is whether the deal gives EDF and its Chinese backers excess profits at the expense of British consumers.

In the wider context the deal is important because the nuclear industry’s revival in democracies depends on it being classed as a low carbon generator, which can benefit from carbon credits and other subsidies in the same way as renewables. This has already been ruled out in most democratic countries outside Europe.

Without state aid the large capital expenditure needed to build nuclear plants is hard to find from the private sector, and the time it takes to build reactors makes the return on capital long-term. Two stations being built in Finland and France are both up to seven years late and construction budgets have already doubled. They are the same design as the reactors intended for Britain. http://www.eco-business.com/news/illegal-uk-state-aid-probe-hits-nuclear-plans/

December 15, 2013 - Posted by Christina Macpherson | EUROPE, Legal, UK