Sustainability 
The European Commission (EC) has published its initial assessment of the Government’s deal with EDF to build a new nuclear power station at Hinkley Point C. The 68 page document highlights areas where the Commission is concerned about the impact of the deal on UK and EU energy market competition. A detailed review of the deal against State Aid criteria is expected to be completed by the summer.
The key areas of concern highlighted by the Commission are: whether the deal addresses a genuine market failure; whether the agreed Contract for Difference will overpay EDF, shielding the company from almost all market risks; and, whether the deal risks crowding out alternative sources of supply and undermining potential trade (in electricity) between the UK and its neighbours.
EC Commissioner for Competition Joaquin Almunia wrote that by providing fixed revenues for 35 years and credit guarantees: “it would appear to be difficult for the UK to provide a greater degree of certainty”.
As well as questioning the need for revenue support, the document also challenges the Government’s view that new nuclear will help alleviate security of supply concerns, noting that capacity issues will be at their most severe before 2020, whereas the first new plant are not expected to come online in 2023. Although EDF has agreed the draft terms of an investment deal for the project, the company will await the results of the inquiry before making a final investment decision.
Cross-party forum
Carbon Connect
