Commission concludes modified UK measures for Hinkley Point nuclear power plant are compatible with EU rules.
The European Commission has found revised UK plans to subsidise the construction and operation of a new nuclear power plant at Hinkley Point in Somerset
to be in line with EU state aid rules. During the in-depth investigation, the UK has agreed to significantly modify the terms of the project financing.
As a result, the state aid provided will remain proportionate to the objective pursued, avoiding any undue distortions of competition in the Single Market.
The modifications also reduce UK citizens' financial contribution to the project.
The UK plans to establish a price support – the "contract for difference" - ensuring that the operator of the Hinkley Point nuclear plant will receive stable revenues for a period of 35 years.
The operator will also benefit from a State guarantee covering any debt which the operator will seek to obtain on financial markets to fund the construction of the plant.
During the investigation, the UK authorities demonstrated that the support would address a genuine market failure, dispelling the Commission's initial doubts.
In particular, the promoters of the project would not be able to obtain the necessary financing due to its unprecedented nature and scale.
The EU's new Nuclear Safety Directive was adopted by the Council on 8th July 2014. The 2014 directive amends the one in force since 2009.
It provides a stronger framework for EU nuclear safety, as called for by the EU Heads of State or Government following the 2011 nuclear accident in Fukushima.
The amended directive takes account of the lessons learned from the EU nuclear stress tests and is based on various sources,
such as European Nuclear Safety Regulators Group (ENSREG), Western European Nuclear Regulators' Association (WENRA) or the International Atomic Energy Agency (IAEA).
It also integrates the contributions of the European Parliament and the European Economic and Social Committee as well as input by industry and civil society.
Member States will have to transpose the provisions of the directive in national law within three years.
The European Commission has proposed to amend the 2009 nuclear safety directive. It sets out EU-wide safety objectives to significantly reduce the risks and protect people and the environment. By introducing a system of regular European peer reviews, increasing transparency on nuclear safety matters and strengthening the powers of national regulators, the directive aims at continuous improvement of nuclear safety across the EU.
Energy Commissioner Günther Oettinger said: "It's up to Member States to decide if they want to produce nuclear energy or not. The fact remains that there are 132 nuclear reactors in operation in Europe today. Our task at the Commission is to make sure that safety is given the utmost priority in every single one of them."
The new directive establishes:
• Safety objective: Member States shall ensure that – in case of accidents - the release of radioactivity in the environment is practically eliminated.
• EU-wide, legally binding reviews every six years: Member States will jointly agree on the specific topic (s) and the common methodology of the reviews that multinational teams will carry out. Member States are also responsible for implementing the recommendations. In case, there is a delay or recommendations are not implemented, the European Commission can organize a verification mission to the Member State.
• National reviews: Every nuclear power plant undergoes a periodic safety review at least once every 10 years and a specific review in case of a possible life time extention;
• New Power Plants: All new nuclear power plants are designed in a way which ensures that if a reactor core is damaged, this has no consequences outside the plant;
• On-site emergency preparedness and response: Every Nuclear Power Plant needs to have an emergency response centres which is protected against radioactivity and earthquakes or flooding and implementing strict accident management guidelines;
Following the March European Council the European Commission has conducted an in-depth study of EU energy security and will present a Strategy to reduce Europe's energy dependence ahead of the European Council of 26 and 27 of June. This plan will include a strategy to turn the current international situation into an opportunity to rethink the EU's energy security.
On 21 May 2014 representatives from Member States and third countries as well as energy companies, regulators, business and consumer associations, think-tanks gathered in Brussels on a high-level conference on Energy Security to discuss ways to reduce the EU’s energy dependence. Participants focused on energy demand and production, energy efficiency, integrating the internal energy market, diversifying energy sources and routes and the role of the EU’s external energy policy. European Commission President Barroso, Energy Commissioner Oettinger and Poland’s Prime Minister Tusk further discussed how to strengthen Europe's security of supply.
European Commission President Barroso said: "The Ukraine crisis once again confirms that it is in our own interest to choose a path towards a low carbon, competitive and energy secure European Union. Increasing our security of supply has been an overarching goal of European energy and climate policies for years - now it is time to take it one step further. It is vital for our prosperity, for our strength and our credibility. So we have to prove that European cooperation and integration is the right way – the only way - to overcome such challenges. The Commission will make very clear proposals to the June European Council. It is then for our Member States to run with that ball."
EU Energy Commissioner Oettinger added: "The Commission is intensively working on a new European Energy Security Strategy. As there is no miracle solution for increasing energy security, we have to address the issue from different angles. We need to diversify our supplier countries, especially in the field of gas. The development of the Southern Corridor, which will enable gas deliveries from Azerbaijan as from the end of 2019 is crucial in this respect. In addition, we need to intensify our efforts in the area of energy efficiency. A key element for increasing energy security is of course the completion of the internal energy market and upgrading the gas and electricity infrastructure in the EU. The first call for proposals under the Connecting Europe Facility that helps to finance important projects is now open. In the first round €750 million - out of a total of 5.85 billion until 2020 - will be made available".
In response to the political crisis in Ukraine and the overall importance of a stable and abundant supply of energy for the EU's citizens and economy, the European Commission has adopted an European Energy Security Strategy on 28 May 2014. This strategy is based on an in-depth study of Member States' energy dependence. Diversifying external energy supplies, upgrading energy infrastructure, completing the EU internal energy market and saving energy are among its main points. The strategy also highlights the need to coordinate national energy policy decisions and the importance of speaking with one voice when negotiating with external partners.
According to the document a European internal market for energy is a key factor in energy security and is the delivery mechanism to achieve it in a cost-effective way. It underlines that electricity produced from nuclear power plants constitutes a reliable base-load electricity supply of emission free supply and plays an important role in energy security. The worldwide uranium supply market is stable and well diversified but the EU is nonetheless completely dependent on external supplies. There are only a few entities in the world that are able to transform of uranium into fuel for the nuclear reactors, but EU industry has technological leadership on the whole chain, including enrichment and reprocessing.
The document says nuclear safety is an absolute priority for the EU. The EU should remain the pioneer and architect for nuclear safety at international level. It is therefore important to accelerate the adoption of the amended nuclear safety directive, reinforcing the independence of nuclear regulators, providing information to the public and regular peer reviews.
However, Russia is a key competitor in nuclear fuel production, and offers integrated packages for investments in the whole nuclear chain. Therefore, particular attention should be paid to investments in new nuclear power plants to be built in the EU using non-EU technology, to ensure that these plants are not dependent only on Russia for the supply of the nuclear fuel: the possibility of fuel supply diversification needs to be a condition for any new investment, to be ensured by the Euratom Supply Agency. Furthermore, an overall diversified portfolio of fuel supply is needed for all plant operators.
In the past two decades, indigenous energy production in the European Union has steadily declined in spite of an increase of renewable energy production (between 2001 and 2012, overall EU energy production declined by 15%). It is however possible to slow down this trend in the medium term by further increasing the use of renewable energy, nuclear energy, as well as sustainable production of competitive fossil fuels where these options are chosen.
On 22 January 2014 the Commission proposed energy and climate objectives to be met by 2030. The objectives send a strong signal to the market, encouraging private investment in new pipelines and electricity networks or low-carbon technologies. The targets must be met if the EU is to keep its promise to cut its greenhouse gas emissions by 80-95% by 2050.
Supported by a detailed analysis on energy prices and costs, the 2030 framework will ensure regulatory certainty for investors and a coordinated approach among Member States, leading to the development of new technologies. The framework aims to drive continued progress towards a low-carbon economy and a competitive and secure energy system that ensures affordable energy for all consumers, increases the security of the EU’s energy supplies, reduces our dependence on energy imports and creates new opportunities for growth and jobs, by taking into account potential price impacts on the longer term.