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7 October 2014

Hinkley nuclear power plant bombshell for out-going European Commission

Outgoing college members face a decision with far-reaching consequences on the Hinkley C power plant.

By Molly Scott Cato

The 28-strong outgoing European Commission might have been hoping for a gentle exit. But en route to the exit door, former EU President Barroso and his sidekick, competition commissioner Joaquín Almunia, have dropped a radioactive bombshell. In the next few days the outgoing college members face a decision with far-reaching consequences, both for the integrity of decision making in Europe and for European energy policy for anything up to the next 50 years.

This Wednesday EU Commissioners are due to vote on whether to give the green light to the financial deal that would see Hinkley C nuclear power plant being built in Somerset, and subsequently open the door for further nuclear expansion across Europe. The deal would see EDF, the company planning to build Hinkley C, offered a strike price for its electricity of £92.50 per MWh – roughly twice the current wholesale price of power – as well as a state credit guarantee of £10bn.

In December 2013, the Commission raised doubts on almost all aspects of the project, stating that the “aid would in principle be incompatible under EU state aid rules.” At that stage it raised a number of serious concerns about the level of government money that was being provided and the nature of the contract. Given this clear legal ruling, Commissioners will need to ask themselves what has changed since then.

The Commission itself valued the state aid for EDF from the UK government at £17.6bn: at what point is state aid no longer state aid? The Commission raised concerns about the failure of Hinkley to meet energy security criteria, given that it would not produce any electricity until at least 2023. So when does lack of energy security suddenly become energy security? The Commission also concluded that the nuclear industry was a mature industry that did not warrant state aid: at what point does a mature industry suddenly become an immature one?

In the corridors of Brussels it is whispered that the German federal government has been involved in a back-room deal. Angela Merkel has previously achieved exemptions from EU subsidy rules for the German government’s Renewable Energy Sources Act (EEG). The legislation behind this, which provides feed-in incentives for renewable energy technologies, is helping transform energy generation away from fossil fuels and nuclear towards renewables, which now accounts for around 30 per cent of Germany’s electricity.

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However, in return for the European Commission granting exemptions from EU subsidy rules, Merkel is rumoured to have agreed to support British nuclear subsidies. So, while the Berlin government is de-commissioning its own nuclear power plants and turning to renewables, it is at the same time undermining nuclear phase-out across the rest of Europe.

The case of Hinkley Point C shows clearly that nuclear power is neither economic nor competitive; if it were it would not need the inflated strike price to make it profitable. Wind power is already cheaper than nuclear on land and by 2023, the earliest date a new reactor in England would become operational, a whole range of other technologies will be able to provide electricity at much lower cost.

In some European countries – such as Sweden and the Czech Republic – new plants are not being pursued precisely because they are not economically viable. If Commissioners agree the Hinkley deal, UK taxpayers would be left paying for one of the most expensive power-stations in the world – and for the consequences when things go wrong – while EDF rakes in subsidies. Such a move would also lock in support for nuclear for decades, just as major banks are telling investors the smart money is in renewable energy. For example, giant multinational investment bank, UBS, has concluded Hinkley could be obsolete within 10 to 20 years. They say large power stations will soon become extinct because they are inflexible, and are “not relevant” for future electricity generation. The bank urges investors to “join the [solar] revolution”.

Nuclear power-stations cannot be part of our future. They are simply too expensive and too dangerous and there is still no solution for the radioactive waste. The European Commission must avoid making a false case on the economic viability of nuclear and instead make clear its preference for Member States to invest in renewable energy and energy efficiency. This is the best way of ensuring our energy security and independence from gas and oil imports from Russia and other countries. Nuclear is a red herring; it takes at least a decade before a plant such as Hinkley can come on-stream. Renewables on the other hand offer greater flexibility and are quicker to install.

As Green MEPs our appeal is to the 27 other Commissioners: Do you agree with the proposal from Joaquín Almunia? Or will you dare to replace his backward-looking deal with a future-oriented, secure energy policy for the Union? It is vital that the out-going commission dispel the suspicions of citizens by making the right choice over Hinkley.

We believe a new pact for energy efficiency and security provided by a variety of clean renewable sources is what is needed. We urge departing Commissioners to walk through the exit door with their heads held high, in the knowledge they showed principled opposition and set Europe on a course for an energy policy for the common good.

Molly Scott Cato is the Green MEP for the southwest of England and Gibraltar, elected as the first Green MEP for the region in May 2014. She was formerly Professor of Strategy and Sustainability at the University of Roehampton

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