On the 8th October 2014, final approval was granted from European Union Regulators for the nuclear power station at Hinkley Point C in Somerset, which is expected to begin operating in 2023. The 16 billion pound nuclear power station is one of Europe's biggest and most controversial infrastructure projects, and is the first time that the European Commission has approved significant state aid for a new nuclear power plant. The approval is important for the developer, EDF Energy, who aim to provide 7 per cent of the UK's electricity from the plant.
The decision signifies the beginning of investment in a new fleet of nuclear power stations, which will potentially reduce household bills by around £95 in 2030, and provide thousands of jobs for local people. It will be essential for Britain's energy security, as it will power more than 6 million homes, replacing the old nuclear power plants which are due to close before 2023. It should give confidence to nuclear investors that the same benefits can be attained at the four new nuclear sites planned for the UK.
The project will, for the first time ever, be built without money from the British taxpayer, but at a competitive rate for industry. Instead, the project will be funded through the EDF group and other investors, who will pay for it through energy bills. Additionally, for the first time ever, the operator of the plant will be responsible for the full costs of decommissioning and its share of the costs of waste management.
Although the UK energy secretary had already agreed the terms in September with the EU competition commissioner, final approval was still needed from the full college of 28 EU commissioners. Of the 28 commissioners, only 16 voted in favour of Hinkley- just ahead of the 15 votes needed for approval. The controversy surrounded whether the funding for the project broke the state aid rule-over the extent to which a funding deal between the UK government and power giant EDF Energy constituted a subsidy- with at least five of the commissioners raising concerns ahead of the meeting.
The approval was granted due to changes agreed by the British authorities to cut subsidy by more than £1 billion. The UK government has agreed to pay EDF a strike price of £92.50 for every megawatt hour of energy Hinkley C generates, which is roughly twice the current wholesale price of electricity. However, the commission has stated that if the profits go beyond a 13.5 percent return, then 60 percent would be returned to the taxpayer, allowing the gains to be shared with the public. This agreement has been stated to last the entire lifetime of the project, which is currently estimated at 60 years.
The Government and EDF are continuing to work together to finalise the project, with plans in place to confirm the full terms of the Contract for Difference and the financing arrangements. This demonstrates that there is still a vast amount of work to do before the final contract is signed. However, as EDF chairman and CEO Henri Proglio said: "The approval by the European Commission is a major milestone for the Hinkley Point C project."
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