The European Commission has confirmed that it has opened an in-depth investigation into the UK government’s plans to subsidise the construction of a new nuclear plant at Hinkley Point in Somerset.
The EC “has doubts” that the nuclear project suffers from a genuine market failure and so is investigating the use of state aid to support it.
Commission vice-president Joaquín Almunia, explained the EC’s decision to launch the investigation, he said: “The UK has notified a mechanism which is explicitly aimed at attracting investment in nuclear energy. It is a complex measure of an unprecedented nature and scale. The Commission therefore needs to investigate thoroughly its impact on the UK and the EU internal energy markets, and is requesting all interested parties to submit their observations.”
After protracted negotiations between the government and EDF, the site at Hinkley was granted a strike price of £92.50/MWh which will be CPI-linked from 2023 for 35 years – a figure that energy secretary Ed Davey described as “competitive with projected costs for other plants commissioning in the 2020s”.
To put the level of strike price in context, solar PV will receive a strike price of £100/MWh in 2018/19. Writing on Solar Power Portal, Seb Berry, head of public affairs for Solarcentury explained that by 2019 the solar industry will require less support than nuclear, explaining that solar will only “require a strike price of £86, falling year-on-year thereafter, paid over 15 not 35 years and with no nuclear-style small print permitting a possible increase in strike price once those terms are set”.
The confirmation of the EC investigation could delay the implementation of new nuclear in the UK further. However, the UK solar industry is confident that it can fill the gap. In an open letter to Prime Minister David Cameron, Mark Turner, operations director at Lightsource Renewable Energy, explained: “The solar sector in the UK is gaining traction and the experience in Germany and Italy has shown that the solar industry has the capability to deliver the same energy production as Hinkley Point C in less than two years and at a comparable cost.”