Countdown begins for Hinkley nuclear challenge as decision published

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The European Commission’s decision on Hinkley Point was published in the Official Journal on Tuesday, and there now commences a two month period whereby potential objections from Austria, Luxembourg and other entities can be recorded. If the decision is contested it may prove a fatal blow to the UK’s nuclear power ambitions due to the lengthy delays that would entail.

Dr Dorte Fo Dorte Fouquet, Partner, BBH Brussels uquet, Partner, BBH Brussels who has been advising Vienna on the matter of their objection to Britain’s flagship nuclear power project on the basis of State Aid contravention, told an audience at Platts Power Summit in central London today that if Vienna presses on with its challenge it could set back construction of the Hinkley Point C project for around eight years based on average case statistics.

She added that were it to go unchallenged “this decision would be practically the end of the internal market”.

“This morning saw the publication of the decision in the Official Journal, the official EU text translated into all European languages. The clock is ticking now for those who want to oppose it - the general court has until July to receive any annulment pleas.”

Paul Spence, Director of Strategy and Corporate Affairs for EDF, the project’s developers reacted to the news by saying that he had full faith in the original decision, which came about after what he called a ‘very thorough process.’
Paul Spence, Director of Strategy and Corporate Affairs for EDF
“We and other potential investors have watched the journey through Brussels – the phase 2 investigation was a very full critique, having seen the detail of its conclusions. Shortly after we heard the Austrians were considering an appeal… and at some point between now and July I will get to see what basis there is for objection to what has been an extremely thorough basis for the project.”

The Austrian government has reiterated to Power Engineering International in recent weeks that it will not be deterred in pursuing action against the Commission once the decision enters official law.

Fouquet told the audience that the narrative that nuclear was a totally carbon-friendly option was a ‘myth’. She added, “if a country wants to have a special energy mix in what is a more inter-connected world, it can only be without taking out public money to finance it.”

In response to questions from the floor on what the detail of Austria’s potential case was, Dr Fouquet said she could ‘not give too much away’ as it is an ongoing process, currently being discussed intensively by the Austrian government’s legal department, but referred again to initial statements made by Vienna, when the Commission provided its initial decision.

She pointed to the presence of two French state-owned companies in EDF and Areva and two Chinese publically owned companies, their financial viability and their potential ‘to change the rules of assessment.’

She added that it was not a ‘common interest to all member states to have nuclear in the energy mix’ even if it made sense for the UK, and pointed out that nuclear power was prohibited in many European member states.

"Austrian leaders might be asked why did you sign the treaty at the time? They will say that when they signed the accession contract it was made clear that it was in common interest.”

Fouquet also said that the Commission could have invited the European Council to make a decision on the programme ‘but it would have meant there had to be unanimity’ for the project to go through.

In her concluding remarks she noted that Poland and Czech Republic among others had declared they would follow suit with their own version of the British Contracts for Difference if the Commission’s decision stood.

EDF strategy chief Spence countered Fouquet’s argument by reinforcing how comprehensive the project had been evaluated by both London and Brussels, and that the CfD applied not just to nuclear but all relevant technologies that met the criteria.

“One of the principals for each member state and the public of that state is the right to make the decision on the energy mix for the energy security for their country. We have been through very rigorous process, with the UK government even altering some of its initial consultation in order to get that starting point.”

“We need this £110bn investment in low carbon technology and we need it be secure. The competition directorate thought that it was appropriate and proportionate – it’s almost irrelevant what I believe. What’s relevant is that it passed the test of what works for the market.”

Spence dismissed the argument of what it meant in terms of other member states potentially following suit.

“It will provide 7 per cent of the UK’s energy, a large amount of jobs will be created, it’s a model for other projects in the UK, and very specifically designed for the UK.”

He was also adamant that the high interest return on the project to EDF was proportionate and in line with construction and operating risks. Admitting that there were ‘less than stellar’ project examples in Finland and France he said there was also plenty of evidence of quality performance in Asia and the Far East

“These projects have run smoothly and the problems in France are not to do with the base technology. In the UK we have the opportunity to learn from those other experiences and we will.”

Responding to Spence’s assurances, Brussels-based Fouquet said there were more problems associated with the project that weren’t being addressed, indicating it could form part of the Austrian challenge, should it come to be officially delivered.

"There is speculation about a UK government golden share because of Chinese involvement and a question over whether the Chinese want more guarantees that Areva won’t go bust during construction.”

Addressing Spence’s remarks on nuclear’s learning process, she said, ”Furthermore I would ask (EDF) how long do you still need to learn about an established technology and still get the taxpayer to fund it – that blows my mind.”

What will give the British government most cause for concern now is the potentially fatal damage an Austrian challenge would represent. Fouquet told the conference of power executives that an appeal going through the European legal institutions could take the guts of a decade.

“In terms of a timeline it would be 34- 50 months and then it could go on to the European Court of Justice, which could also take years, though probably not as much; this is based on average procedures.”

Spence, when asked for a response to this, stopped short of heavy criticism of any potential challenge.

“Having not yet seen whether there will there be an appeal, it would be slightly off to speculate what we would do and when – so until there is a negative announcement the decision to approve stands."

“Not speaking from an EDF point of view but as a UK citizen, to be faced with a circumstance where we have 5 to 8 years of pause as a result of an objection, that doesn’t look like it will be a positive outcome for the UK energy system.”

 



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