In December last year Competition Commissioner Almunia clearly expressed his concerns about the State Aid application for the Hinkley project, a 35 year contract, with guaranteed subsidies, to a nuclear power plant. His apparent intention to backtrack on this matter now, is totally inappropriate and worrying. If confirmed, such a decision, made without adequate evaluation and scrutiny of the project, would constitute a disaster for the internal energy market and achieving the objective of enhanced competition in the energy sector.
"How can the European Commission ask renewables to integrate in the energy market, while at the same time validating another subsidy to nuclear?" queried James Watson, EPIA CEO. "EPIA previously raised concerns about the State Aid rules as they force renewables to integrate into a market that is not yet designed for them. We need new energy market rules that allow for a cost-effective energy transition, not £17bn subsidies for nuclear power," he added.
In just a few years, solar has experienced impressive cost decline thanks to economies of scale and innovations, decreasing its reliance on financial support as it becomes cost competitive. The International Energy Agency estimates that by 2050 the cost of solar technology could decrease by another 65%. Nuclear, however, despite decades of public support, still seems to rely on expensive, long-term, guaranteed subsidies to be economically viable. EPIA looks forward to the release of the Commission report on the cost of subsidies in the energy sector which will highlight the actual cost of the different energy sources. Indeed, while subsidies to the Hinkley project would cost as much as 112/MWh in 2023 (when the plant is expected to start operating), the cost of supporting solar in Germany is already 34% cheaper (73/MWh last year*).
"In order to drive public and private investments, and deliver an energy transition that a vast majority of European citizens want, renewables need fair access to the market. That includes policymakers adopting a balanced attitude towards different energy technologies. These rumours of a possible backtrack by the European Commission, if confirmed, would simply constitute a step in the opposite direction," concluded Mr. Watson.
* Source: Agora Energiewende, "Comparing the Cost of Low-Carbon Technologies: What is the Cheapest Option?", 2013.