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Austria challenges Hinkley Point

The long running saga, and much needed development of the first new build nuclear plant in a generation continues to roll on with little sign of a positive end.

Whilst EDF Energy ‘expects’ to sign up their co-investors by the end of this quarter, Austria has announced an escalation in their objection to the new build. Yes, Austria.

The investment process in Hinkley Point C has been far from straight forward with EDF Energy facing numerous political and commercial hurdles, however they now hope to begin construction of the plant in early 2016 once China General Nuclear Power (CGNP) and China National Nuclear Corp (CNNC) are on board with the project.

However despite this apparent progress, the challenge from Austria could scupper the deal completely.

The Austrian connection

Austria is up in arms at the EU’s decision to allow what they believe to be an illegal state subsidy for Hinkley Point.

Outgoing EU Competition Commissioner Joaquín Almunia last year approved the £17.6bn subsidy deal. This deal effectively guarantees a payment to the plant’s operators for the electricity generated. This payment is set at £92.50/MWH, almost double the current market rate of just £42.50. Unsurprisingly this has been seen as excessive by many and illegal under EU rules by others, most notably Austria.

Austria also happen to be avowedly non-nuclear. A double whammy. This mixture of politics and economics is proving almost as explosive as nuclear fusion itself.

Nuclear bête noire Andreas Molin of Austria’s Environment Ministry cautioned:

“There has been a high-level decision by our chancellor and vice chancellor to challenge the EU decision on Hinkley within two months of its publication in the EU’s official journal.

“If you accept the argument that Hinkley constitutes a ‘market failure’ as put forward by the commission, you could apply it to all other means of electricity production, probably all other forms of energy conversion, and it might even apply beyond the energy sector. We think that the single energy market itself is at stake in this case.

“We will try to prove that the commission did not consider all the things which it should have considered and that there were some procedural flaws”

Any appeal could see the whole project delayed for 2 years, if it is able to commence at all with Molin cautioning that:

“As this is going to be a more complicated and fundamental case, it will last a little bit longer. Two years could be a rough guess.”

The crux of Austria’s challenge is whether Hinkley Point truly met the criteria for state aid awards. These criteria cover such arcane measurements as:

  • Proportionality,
  • Decarbonisation,
  • The potential for market distortion,
  • The definition of market ‘failure’ and,
  • The “objective of common interest” for the ‘bloc’
  • Alignment with the Euratom Treaty (the nuclear equivalent of the EEC coming into effect in 1957 and intended to govern the intra national nuclear energy market)

Who said the Soviet Union collapsed? It merely renamed itself.

Adding further grist to the mill, Almunia’s commission was allegedly close to refusing the deal as they were concerned as to whether the development of Hinkley Point would actually resolve the UK’s security of supply issues.

Mark Johnston, a senior adviser to the European Policy Centre, told the Guardian that:

“The commission took a political decision disguised as a legal one.

“Barroso [Former President of the EC] thought it would be easier to bend over for Cameron than to defend the single energy market. The significance of the case for energy investments across Europe could not be greater.”

Indeed that potential impact could resonate across the world with the nuclear industry yet to recover from the 2011 Fukushima disaster and numerous countries continuing to be under moratorium over new nuclear development.

Somerset has probably not been the focus of such worldwide attention since the Battle of Edington. A great deal rides on this challenge, not least the future security of energy supply in the UK.