French government financial support for Hinkley Point could break EU rules

Posted: April 22, 2016 by oldbrew in Energy, government, Legal, Nuclear power, opinion
Tags: ,

Hinkley Point, Somerset [image credit: conservativehome.com]

Hinkley Point, Somerset
[image credit: conservativehome.com]


This could be yet another spanner in the works for the tottering nuclear power project that Britain’s political leaders seem so keen on. On the other hand a negative view from Greenpeace of nuclear power is no surprise.
H/T Power Engineering International

Legal opinion commissioned by Greenpeace suggests that any French government financial support to EDF to enable the company to build the Hinkley Point C nuclear power station in the UK would almost certainly be blocked by the European Commission.

The legal viewpoint is that the commission would not agree to government assistance as it would constitute a breach of state aid guidelines.

The FT reports that the French government is this week discussing financial support for EDF, after Jean-Bernard Levy, chief executive, said the company needed fresh state help before it would give the long-awaited final go-ahead to the contentious £18bn Hinkley Point project.

Three barristers at London’s Monckton chambers said all possible routes for the government to support EDF would constitute state aid in the EU and therefore require review by Brussels. “It would be difficult to justify such further measures as being compatible with the [EU] internal market,” says the opinion.

The barristers consider four different methods open to the French government to help support EDF, which is 85 per cent state-owned. The first is for the government to take future EDF dividends as shares rather than cash; the second is for a direct recapitalisation of the company; the third is for the state-owned bank CDC to provide support; and the fourth is for France to prop up the utility’s French operations.

The lawyers conclude that a private investor would not credibly provide EDF with investment in any of these ways, meaning the case will probably be brought to the commission.

Full report: Legal opinion rules out French government final support to Hinkley Point – Power Engineering International

UPDATE 24/04/16: Hinkley Point decision delayed until September
http://www.bbc.co.uk/news/business-36126197

Comments
  1. oldbrew says:

    “It would be difficult to justify such further measures as being compatible with the [EU] internal market”

    Not that there is an ‘internal market’ for nuclear power stations in the EU. Who would EDF be competing with?

  2. michael hart says:

    Not only would I not trust greenpeace’s opinion on this, I would not trust anyone employed by them either.
    Having said that, the Austrian Government is already trying to stymie it legally.

    Politics will decide, whatever the merits of the case.. Support of the UK and French governments may, or may not, be sufficient.

    If it was the French and German governments who wanted it to happen, then the chances of success would probably be assured: https://www.youtube.com/watch?v=8H1gx2-WK4s

  3. Kelvin Vaughan says:

    I have read that these rules have been broken by countries before but all they get is a haul across the coals, not one has been fined.

  4. ren says:

    Tomorrow the central Europe will flow arctic air. You may experience snowfall. At night frost.

  5. oldbrew says:

    As there only seems to be one European company willing to build nuclear power stations, what would be the point of invoking EU competition rules?

  6. ivan says:

    The question that no one has asked is, just who are the government trying to pay off with this project?

    If there was the political will to go for nuclear power generation then all the government has to do is allow RR to use their submarine reactors as city power plants. That way power is available where it is needed and transmission costs are reduced.

    If a program like that was introduced, RR could almost end up producing container based power reactors that could be taken to where they were needed.

    The problem with that type of program is the clueless politicians that follow blindly the diktats of the EU and the green blob. It could only happen IF the UK were to shake off the shackles of the EU and the present political parties and get some engineers and people with vision in positions of government.

  7. Graeme No.3 says:

    I suggest you inform Dave Cameron that if the UK stays in the EU then Hinkley Point can’t be built. Watch him writhing in indecision would be fun.

  8. oldbrew says:

    ‘[EDF] Chief executive, Jean Bernard Levy, was due to make a final funding decision by May 12, but he told a board meeting yesterday it would be delayed. Instead EDF will consult its work council further, which will take ‘several weeks’, sources said.’

    ‘If EDF successfully secures funding from the French Government, Greenpeace and energy company Ecotricity are prepared to launch a legal challenge against it, and any subsequent investigation by the European Commission would take one year to complete – delaying the project even further.’
    http://www.thegwpf.com/britains-low-carbon-policy-in-crisis-nuclear-energy-plans-in-doubt/

    They’ve postponed a decision until after the EU referendum.

  9. Fanakapan says:

    Its likely everybody concerned from HMG through to EDF, to the Froggy G, are buying time.

    When this deal was first mooted, fracking and its potential reserves in the UK were still fairly hypothetical. It has become somewhat clearer in the meantime that the reserves available are such that gas powered generation will likely be the cheapest way to provide the UK with electricity.

    If the Nuclear deal were to go ahead under the extortionate terms presented, then in a scenario where gas prices followed the same trajectory as in the US post the fracking revolution, then every UK politician for the next 40 years would face the humiliation of having to explain how they can not get out of a contract that is, or would be, more watertight than the proverbial Ducks rear end. And as we all know, politicians do not like public humiliation.

    Set against that the effort over the last 20 or so years towards convincing the public of the virtue of all things Green, and its easy to see that HMG has something of a problem in that they have to turn around public opinion on a topic that they have worked hard to inculcate, whilst not alienating those that they rely on at the ballot box.

    It seems more obvious by the week that the Only economic choice for future power generation will be gas ?

    And lets not forget that its not only the public who represent an obstacle to what is the most sensible choice. Fracking and abundance is a threat to the rentier crowd of those who sell power, and whose business model is entirely based upon scarcity🙂

  10. oldbrew says:

    EDF are £11 billion short of the £18 billion they need. Looks like a massive hole to fill.

    ‘Hinkley Point decision delayed until September’
    http://www.bbc.co.uk/news/business-36126197

  11. Fanakapan says:

    The Big 6 PowerCo’s have been making a killing and inflated profits by playing the fuel markets up to 3 years ahead. And they used that MO as part of the story that actually supplying power was not that profitable, and that their speculation shenanigans were actually keeping prices in the UK lower than they would be in the absence of their pretending to be investment guru’s as opposed to utilities.

    With the advent of what amounts to an oil price war, with prices going from about $100 to £30 – $40, I would speculate that they have gotten stuck with commitments that are now costing them money ? Its a safe bet that like all those who ride the wave of the market, they failed to recognise impending price collapse, and have portfolio’s that commit them to continuing losses ?

    Its interesting that the smaller energy companies, in this new environment where the Big 6 have their feet stuck in the slough of despond, seem to be making significant inroads into the UK energy scene. No doubt their not being stuck with ongoing losses enables them to offer much better deals.

    I have not seen much in the media about the financial situation of the 6, other than that of EDF. Its entirely probable that other 5 are in as dire a situation as the French company.

    With a Tory government who will be loathe to be faced with a situation where their creations are shown to have become FrankenCompanies, it seems likely that the 6 will be able to continue gouging their client bases rather than lowering prices in line with that which world fuel prices might suggest. There is the prospect of a monopolies investigation being due to be finished, but there can be little doubt that any investigative result will, like the Hinckley business, be kicked out of play ?

    Expect plenty of topics to keep the public gaze diverted, whether that be EU referendums, Striking Doctors, or Academy Schools. But in the medium term, with the UK sorely in need of new generation infrastructure, there may be a problem that the current government will be unable to dodge ?

    Should any of these companies get into real trouble, and with the public being increasingly aware that the High Days of the Thatcher Revolution are long over, then what will likely be a Conservative government will have a real problem. In a world where economies do not show any realistic sign of getting off life support within the next decade, they will be faced with the prospect of subsidising private companies who are offering poor deals to their customer base, whilst the voting public will have a growing appetite for a reassessment of the ‘Market’ as presented by the current paradigm.

    It could be entertaining, or possibly frightening, to imagine who will have their hands on the tiller when the buffers are eventually hit. We know that Cameron will be stepping down, and the upcoming referendum could have the extra result of placing the Tory ‘Crazy Gang’ in the control room ? So whilst friend Salmond effectively dodged a bullet by losing his referendum and thereby escaping the consequences of a drop in oil prices, try to imagine a post referendum UK with a Duncain Smith, or Gove, at the controls in the midst of an energy crisis🙂

  12. oldbrew says:

    Owners of standby diesel generator ‘farms’ would not be upset if Hinkley wasn’t built.

    ‘the UK transmission network needs more flexible assets to provide frequency response services.
    One of the most flexible ways of addressing these needs is through investments in Reserve Power projects. These are typically installations of 8-10 small containerised 2MW diesel-fired generating units. When aggregated into 16-20MW projects, these generators are quick to build, provide material capacity with short response times, low fixed costs, and the ability to significantly reduce the need for additional infrastructure build by being located close to existing substation and transmission assets.

    In most cases, the generating equipment has dual-fuel capability for both diesel and gas. This allows the generator to benefit from both quick start-up (from diesel, full power within 22 seconds) and also lower emissions (by switching to gas once the generator is at full power).’
    http://www.oxcp.com/blog/50-is-the-magic-number-why-the-uk-power-market-urgently-needs-investment-to-provide-frequency-stabil

  13. oldbrew says:

    ‘Thomas Piquemal, the former chief financial officer with EDF, has told a French parliamentary committee meeting that he left the company over a decision to go ahead with the Hinkley Point C nuclear power project, despite his advice to delay it.’

    “Who would bet 60 to 70 percent of his equity on a technology that has not yet proven that it can work and which takes 10 years to build.”

    http://www.powerengineeringint.com/articles/2016/05/former-edf-ceo-cites-hinkley-point-decision-as-reason-for-departure.html

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