Brussels, 19/12/2013 (Agence Europe) - On 18 December, the European Commission opened an in-depth investigation to examine whether UK plans to subsidise the construction and operation of a new nuclear power plant at Hinckley Point by establishing a feed-in tariff ensuring that the operator of the Hinckley Point nuclear plant will receive a stable revenue for a period of 35 years despite the volatility of the wholesale electricity price, are in line with EU state aid rules.
The contract with the operator stipulates that, when the market price at which the electricity is sold is lower than the strike price, the government will pay the difference between the strike price and the market price. Conversely, when the market price is higher than the strike price, the operator will be obliged to pay the difference to the government. The company will therefore not be exposed to market risks for the duration of the scheme (35 years). The operator will also benefit from a state guarantee covering any debt, which the operator will seek to obtain on financial markets to fund the construction of the plant. The level of this aid may reach up to GBP 17 billion. The Commission has doubts that the project suffers from a genuine market failure. (FG/transl.fl)