The European Commission is facing severe criticism after it gave state aid approval for £17 billion (US$27.3 million) worth of nuclear energy subsidies.

The UK government has agreed a 35-year, inflation-linked price guarantee of £92.50/MWh, with the option to increase this 15 and 25 years in. With the Department of Energy and Climate Change (DECC) lowering the market reference price, the cost of topping up EDF’s per MWh rate to £92.50 are now increased.

Meanwhile, the government, on the EU’s direction, has been developing a competitive framework for renewables to bid for support in order to acquire the best value for tax payers.

European Commission vice-president Joaquín Almunia, in charge of competition policy, said: “After the Commission's intervention, the UK measures in favour of Hinkley Point nuclear power station have been significantly modified, limiting any distortions of competition in the Single Market. These modifications will also achieve significant savings for UK taxpayers. On this basis and after a thorough investigation, the Commission can now conclude that the support is compatible with EU state aid rules.”

There is strong criticism from the renewable energy sector, which views the contract as neither competitive or good value and a breach of promises made in the coalition agreement.

“The State Aid guidelines claim to promote competition and cost-effectiveness, but the Hinkley deal makes a mockery of both claims. You don't need to be against nuclear power to see that,” said Leonie Greene, head of external affairs at the Solar Trade Association. “The Hinkley contract was agreed behind closed doors and the result is simply handing out 35 years of subsidy – more than double the 15 years of payments that solar will be lucky to receive in open competition.”

The coalition agreement between the Liberal Democrats and the Conservatives dictated that there would be no new state-funded nuclear power in the UK.

Interest in UK nuclear power seemed to dip as RWE npower, E.ON, ARREVA and a group of Chinese investors dropped interest in developing a site in Wales.

The deal with EDF, which will see the company guaranteed £92.50/MWh, is expressly not a subsidy, according to the Liberal Democrats. Ed Davey has said that when the cost of carbon emissions is factored in, it is cheaper than the market price for electricity.

“It's astonishing how far the Conservatives and Lib Dems have moved from their own Coalition Agreement,” said Greene. “The Agreement committed to boost opportunities to increase local renewable energy, while not providing subsidy for new nuclear. Four years later the Coalition is suppressing solar, while providing special subsidies for new nuclear. It's a particularly depressing example of how susceptible Westminster and Brussels are to protecting powerful incumbent interests,” she added.

Modelling by the STA suggests solar power will be cheaper than that of Hinkley by as early as 2018.

On Tuesday, DECC’s minister with responsibility for solar, Amber Rudd, said she was targeting subsidy-free solar by 2020. The STA itself will reveal details of its pathway to just that during the Solar Energy UK event in Birmingham next week.