The European Commission today launched investigations into two types of financial support for energy projects: the British government’s guaranteed price for power from a nuclear plant, and the German government’s subsidies for renewable energy.
 
The United Kingdom’s government announced in October its intention to award a contract to French energy company EDF (with support from Chinese investors) to build a nuclear reactor at Hinkley Point on the Bristol Channel, already the site of other nuclear reactors. It would be the first nuclear project in Europe since the 2011 Fukushima disaster.

The UK government’s contract with EDF guarantees that for 35 the power generated by the plant will be sold at a price of £92.50/MWh. This is double the current wholesale power price.

This would be the first time a member state guarantees a price over a very long period for a nuclear period, and so the announcement yesterday (18 December) that the Commission is taking its investigation into a second phase was widely expected. The UK government will dispute that the ‘contract for difference’ constitutes state aid. It contracts the government to compensate EDF if the market price for energy is lower than the agreed price – and EDF to compensate the government if the market price rises above the guaranteed price.
 
The UK’s secondary argument is that, if this is considered state aid, it should be permitted because the project would not be funded without it and the project is necessary to meet the government’s decarbonisation and energy security goals.
 
A public consultation will begin in January, once commercially sensitive information has been removed from the UK’s evidence to the Commission. A decision is expected from the Commission in the Spring. The case is being closely watched by other member states, particularly in eastern Europe, which are considering building nuclear power plants.
 
The Commission also announced yesterday that it was launching a full investigation into German subsidies for renewables under its renewable energy act (EEG) to determine whether these subsidies constitute illegal state aid. The investigation is looking at the law’s exemptions scheme, which makes consumers pay a green surcharge which funds renewable projects, but exempts heavy industry.

“We received various complaints from consumers and competitors on this and the commission must therefore investigate this particular matter in depth,” said Joaquin Almunia, European commissioner for competition.
          
In a third move, the Commission also published draft state aid guidelines for energy, partly to more clearly address problems presented by Germany’s renewable energy policy. The review, which is now open for public consultation, questions support for renewables. It notes that unpredictable and sometimes ineffective public intervention has sometimes led to an increase in electricity costs. The goal is to move renewables subsidies to more “market friendly” support such as market premiums or certificate schemes as the market becomes more mature.

The draft guidelines also suggest exempting certain kinds of aid from prior notification, such as energy efficiency measures and district heating. A final version of the guidelines is expected in by the end of next year, to be implemented from 2015.
 
Claude Turmes, a Green MEP from Luxemburg, who drafted the Parliament’s response to 2009 legislation on renewable energy, denounced the Commission’s moves, saying that the combination of the review of state aid guidelines and the German investigation would hurt the renewables sector.
 
“The lengthy and exhausting legal fight that [the German state aid investigation] will trigger risks putting renewables deployment on hold and killing off any investors’ appetite,” he said. “With the revision of the state aid guidelines, the Commission imposes a limit on renewable energy development in Europe, since auctioning and green certificate models should be the main future support systems for renewables.”
 
He said the “hypocrisy” of the Commission would become “even more visible” if it permitted the UK government to subsidise EDF for nuclear energy.

Click Here: Maori All Blacks Store