Although the Hinkley Point C new nuclear project, being developed by the EDF led consortium, has gained state aid approval for financial support, there are still hurdles for the project to overcome. The support package includes a Contract for Difference and UK backed guarantee to unlock debt financing. EDF says it can build Hinkley Point for £16bn but the European commission says the cost, by the time it is meant to become operational in 2023, is more likely to be £24bn.
Renewable energy firms including Ecotricity are considering a legal challenge to the decision on the funding package. Furthermore, the UK’s National Audit Office (NAO), which scrutinises public spending on behalf of parliament, is investigating whether the guaranteed ‘strike’ price of £92 per MWh, approximately double the current wholesale cost of electricity, represents value for money over a 35-year period. The NAO says their work will look at DECC’s commercial approach and proposed terms, reporting to parliament with regard to value for money and risks.
The NAO move, which follows pressure from a House of Commons committee, puts pressure on the government. However it has pleased green groups which believe nuclear is getting preferential treatment over wind farms.
A DECC spokesperson said: “This month, the commission agreed that Hinkley represents a good deal for both bill-payers and investors. It’s perfectly ordinary for the NAO to look into large investment contracts and we will be working with them as we move closer to finalising the contract. We will not go ahead with any contract unless it is good value for money.”
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