Austria's government has confirmed that it is to launch a legal challenge against the European Union's decision to allow subsidies amounting to billions of pounds for the proposed 3.3 GW nuclear power station Hinkley Point C. Its decision, though expected, casts new doubt over the UK's first planned nuclear reactors in 20 years.
In October the EU approved a deal that included £17.6 bn in subsidies for the plants output, primarily in the form of a wholesale price guarantee for 35 years, the so called strike-price of £92.50 per MWh, and loan guarantees. The new plant is expected to provide 7% of the UK's electricity by 2023. David Cameron had supported the deal, calling it "a very big day for our country".
But the appeal by Austria, a non-nuclear nation, will be launched by April and could delay a final investment decision by the UK government for over two years. It is likely also that Luxembourg will support the action in the European court of justice, arguing that the UK's loan guarantees constitute illegal state aid.
"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," commented Andreas Molin, the director of Austria's environment ministry, in an interview with UK newspaper The Guardian.
Work has already begun at the Hinkley site, and primary developer EDF had planned to sign a funding agreement with its Chinese investors in March, a key factor in settling procurement plans for the £24.5bn build. But the lawsuit may delay such plans, perhaps by as much as two years.
Andreas Molin commented "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."
Linkedin
