Smith slams "dirty deal" on Hinckley nuclear subsidies

Alyn Smith, Scottish Member of the European Parliament and former member of the Parliament's Industry and Energy Committee, has lashed out at today's (Wednesday) decision by the European Commission to approve 19 billion EUR of support from the UK Government to the builders and operators of the new nuclear power plant at Hinckley Point, EDF Energy.

This is in stark contrast to their initial opinion that there was a strong case that the package of financial support, due to last for at least 35 years, broke EU state aid rules. The Austrian Government has vowed to launch a legal challenge to the subsidy as illegal state aid.

Alyn said:

"This decision beggars belief. For all the misguided rhetoric about the supposed costs of renewables, this bung from the UK Government, ironically given their professed belief in market forces to a subsidiary of a foreign country's state energy company, for a single nuclear power plant - giving them a guaranteed price double the normal market rate - completely dwarfs that, with an enormous potential to completely distort the energy market and increase consumers' electricity bills.

"I find it astonishing that the Commission, with seemingly clear disregard for their own state aid guidelines, has waved this through, and I fully support the Austrian government in their coming attempts to challenge this in the courts.

"Scotland has no need of more of this expensive, wasteful and risky technology. Already, around 40% of our electricity demand derives from renewable technologies like wind and hydro, underpinning 11,000 jobs in Scotland and helping us reduce our carbon emissions by 30% between 1990 and 2012, compared to 24% in the UK as a whole. The European Marine Energy Centre in Orkney is pioneering the next generation of wave and tidal technologies.

"This is yet more evidence of how Westminster's priorities in the EU are simply not Scotland's."

Despite the fact that at least five commissioners raised objections, the College of Commissioners approved the UK Government's proposals subject to minor alterations, such as tougher profit clawback clauses.  However, the main aspects of the proposed package of support remain, including the decision to offer EDF a guaranteed electricity price of £92.50 per MWh, a level double that of the current wholesale price of power, due to rise in nominal terms to £279 per MWh in 2058.  A credit guarantee of £10 billion has also been secured by EDF.

As Alyn's political group in the European Parliament, the Greens/European Free Alliance, pointed out to President Juncker in a letter last month, in addition to the enormous amounts of public money spent and the subsequent distortion of the market away from clean green renewables, the Commission's decision contradicts its own assessment of the situation last year, when it stated that: a) the award would distort competitive markets and free trade ("In particular, the Investment Contract might result in a substantial transfer of wealth from consumers to NNBG if the actual cost of capital for nuclear energy turned out to be lower than the one the UK authorities have negotiated."); b) that it would "most likely lead to an increase in retail prices"; c) that nuclear is a mature technology whose market is not characterised by the sort of features that would warrant state aid; and d) "that a support mechanism which is specific to nuclear energy generation might crowd out alternative investments in technologies...".