The government’s deal to underwrite the £16bn Hinkley Point nuclear power station plan faces delay and possible rejection after the European commission said it was ready to launch an in-depth inquiry into the agreement.
The EU competition commissioner said Brussels was likely to investigate the deal, which guarantees a minimum power price for 35 years, to make sure it conformed with state aid rules. The commission frowns on national governments offering deals to companies that stifle competition and distort the market.
Joaquín Almunia said: “We are starting to analyse what is in the British proposal. Probably we will open a formal investigation because many people are asking the same question [whether the UK’s agreement was too long].”
Energy secretary Ed Davey gave the go-ahead in October for a consortium led by France’s EDF Energy to build the Hinkley Point C plant in Somerset. Its two reactors will cost £8bn each and will provide enough power to supply 7% of Britain’s homes for 60 years.
Davey agreed a minimum price of £92.50 for every megawatt hour (MWh) of energy that Hinkley Point generates – almost twice the current wholesale cost of electricity. The deal with EDF was unprecedented and made the UK the first European country to offer a set price over 35 years for a new nuclear project.
EDF laid off workers at Hinkley Point in April to cut costs when talks with the government were making slow progress. The company was said to be spending £1m a day on the project.
The government has said it is confident the deal will stand up to EU scrutiny but a formal probe could take years and cast prolonged doubt over the plan. The government has said the new plant is vital to make Britain more self-sufficient and to cut use of fossil fuels.

