It is now clearer than ever that nuclear energy is not eligible for state subsidies and that the UK plan is at odds with competition and EU energy market laws.
New rules on state aid adopted by the European Commission will make it harder for the UK and other governments to subsidise nuclear energy projects like the new reactors planned for Hinkley Point in Somerset.
UK ministers unsuccessfully lobbied the EU executive until the very last minute to create exemptions that would make nuclear energy eligible for State Aid under the new rules.
Piling problem on problem
The UK government is already in trouble over its plans to subsidise the mainly state-owned French energy giant EDF to build Hinkley C, a twin reactor nuclear plant.
The Commission is currently investigating the EDF deal for a possible breach of EU competition rules. The UK Government is under fire for agreeing to pay EDF almost double the current market price for the electricity generated at the plant for 35 years, as well as providing £10 billion of construction finance guarantees.
It is estimated this strike price agreement will cost bill payers more than £30 billion over the plant's lifetime, or even as much as £100 billion, leading commentators to brand Hinkley C as the "world's most expensive power station".
Greenpeace: 'a serious blow'
Commenting on the new state aid rules for nuclear, Greenpeace UK energy campaigner Louise Hutchins said: "These new rules are a serious blow for Cameron's plans to waste billions in bill payers' money on Hinkley, probably the world's most expensive power station project.
"It is now clearer than ever that nuclear energy is not eligible for state subsidies and that the UK plan is at odds with competition and EU energy market laws.
"If the government is really worried about energy security it should plough investment into Britain's clean renewable energy where prices are tumbling, and into energy efficiency measures."
But the new rules, which will come into force on 1 July 2014, have also been criticised for putting the brakes on small and mid-scale renewable energy projects.
