The European Commission today gave the
go-ahead for the UK government to subsidise the building
of two new nuclear reactors. The decision is something of a U-turn
for the commission, which outlined a range of objections to the
deal late last year.
The UK government last October signed a
deal with energy company EDF to build the first new
nuclear power plant in the UK for 20 years, worth between £16
billion and £24.5 billion. The government agreed to pay a
guaranteed price for the plant's electricity and underwrite the
loans needed to get construction started.
The European Commission was called in to check the deal
contravene EU laws designed to avoid governments giving
unfair support to particular industries. Last December, the
commission published a
long list of objections to the deal. But today it has
decided the deal can go ahead after all.
So why the change of heart?
Clawing back profits
It's hard to know exactly what went on
behind the scenes over the last 10 months, but the commission claims two
changes to the Hinkley deal were enough to get it to change its
The commission originally said the UK government hadn't forced
EDF to agree to pay enough money back if the Hinkley plant was more
profitable than expected. The government agreed to tweak the
earlier this month, and seems to have won the commission
The commission was unhappy with how the government and EDF
initially agreed to split the profits from the plant once it was up
and running, called a 'gain share mechanism'.