Greenpeace Energy to launch legal challenge to UK nuclear subsidies

| 5th March 2015
Building Hinkley C will damage renewable energy projects like this: Greenpeace Energy's Buchhain wind park. Photo: © Marc-Oliver Schulz / Greenpeace Energy eG.
Building Hinkley C will damage renewable energy projects like this: Greenpeace Energy's Buchhain wind park. Photo: © Marc-Oliver Schulz / Greenpeace Energy eG.
The UK's troubled Hinkley C nuclear power station faces a legal challenge from Germany's biggest energy co-op, which claims that the subsidy package will distort energy markets across Europe and disadvantage renewable generators and vendors.
A new reactor built at Hinkley Point, supported by billions of taxpayers money, is not a purely British affair, but directly disadvantages us as a German enterprise active in the European electricity market.

German green power supply company Greenpeace Energy (GPE) will take legal action against the European Commission because it has approved State aid worth billions for the building of the UK's new Hinkley Point C nuclear plant.

According to GPE, the nuclear subsidy "threatens to distort competition in the European Union against genuine clean energy" and "could act as precedent and further undermine the EU energy market."

"Highly subsidised nuclear power from this plant will noticeably distort European competitiveness. It will have an effect on prices at the power exchange in Germany as well", says Sönke Tangermann, GPE's managing director.

"This effect will have economic disadvantages for committed green power providers like us, and that's why we are going to court."

He adds that GPE will file a plea for annulment at the European Court of Justice in Luxembourg "as soon as the Commission's State aid approval is published in the EU's Official Journal and the period prescribed for bringing an action begins."

Austria is also expected to launch a legal action against the Hinkley C subsidies - in the face of menacing threats from UK diplomats that the UK would "embrace any future opportunity that arises to sue or damage Austria in areas which have strong domestic political implications."

Far higher subsidies to nuclear than to renewables

Last October the EU Commission approved State aid for the new build of two nuclear reactors at Hinkley Point in Somerset. GPE estimates that the immediate subsidy is worth about €22 billion, or £16 billion.

However the picture is complex as the aid package includes an inflation-proof generation subsidy of £92.50 per MWh for 35 years, construction guarantees, limits on liability for decommissioning, and a low accident liabilty cut-off. Other analysts believe the true cost as far higher and could amount to £30 billion or more.

The generation subsidy alone guarantees Hinkley's power a wholesale price of £92.50 per MHh, double the market price, or 9.25p per unit - equivalent to almost 13€c. Adding all the elements together, says GPE, "The resulting subsidy is far higher than that for wind or solar power in Germany."

It's also much higher than renewable energy subsidies in the UK. Last week the UK government awarded contracts to renewable energy generators under its new 'contracts for difference' (CFD) auction. Typically wind generators were bidding £82.50 per MHh, and solar generators came in even lower, at £79.23 per MWh and £50 per MWh.

Also the contracts are for only 15 years - as opposed to the 35 years for Hinkley C - and contain no additional support or guarantees. The entire CFD package for new renewable energy capacity is limited to just £50 million per year, rising to £65 million in future years.

As reported on The Ecologist, the effect of the UK's energy policy will be to almost kill off the flourishing solar sector, reducing the rate of new solar build from 2,000-3,000 MWh per year, to an estimated 32MW.

Many critics believe that the government is cutting back on renewables that are increasingly competitive against fossil fuels as prices rapidly drop, to make way for far higher-priced nuclear power.

Hinkley threatens to distort the entire European market

An expert opinion commissioned by Greenpeace Energy from analysts Energy Brainpool shows that Hinkley Point C will lead to a shift in price levels in the European electricity market.

The opinion explains that lower prices for electricity at the power exchange in Germany will discriminate against those suppliers that procure green power at fixed prices directly from plant operators in the framework of the German Renewable Energies Act.

"Unlike the claims of Prime Minister Cameron, a new reactor built at Hinkley Point, supported by billions of taxpayers money, is not a purely British affair, but directly disadvantages us as a German enterprise active in the European electricity market", says Tangermann.

Due to the price effects of Hinkley Point C, the costs of the system laid out in Germany's Renewable Energies Act (EEG) to foster renewables are likely to rise because the operators of renewable energy plants - with fixed feed-in tariffs - would in future have to be paid a larger difference in the electricity price at the power exchange.

This would probably cause a small increase in the renewable energy surcharge, while "the strain it would put on the EEG system is an outrage", says Tangermann.

Will Hinkley corner European Investment Funds?

GPE's other fear is that Hinkley, and other nuclear projects elsewhere in Europe, could grab a huge share of the European Investment Fund presented by Jean-Claude Juncker, president of the EU Commission, when it enters into force.

The UK has already applied for €46 billion to fund Hinkley C and two other nuclear power stations from the projected €315 billion fund, and this could be essential as other potential funders have withdrawn. Poland is also applying for €12 billion for new nuclear build.

Moreover, the EU intends to massively extend cross-border power lines, meaning the negative effect of this development, as calculated by Energy Brainpool, would be reinforced on a massive scale.As such GPE sees in the approval of State aid for Hinkley Point C a precedent for other nuclear projects that will hugely distort Europe's energy market, says Tangemann:

"If the Commission's approval goes unchallenged, then Hinkley Point C is just the tip of the iceberg, which is why we are calling on the German government to take legal action against the unfair State aid approval for Hinkley Point C. It must not open the door to other hazardous and absurdly expensive nuclear power projects in Europe."

Germany's biggest independent energy co-op

GPE is Germany's largest national, independent energy cooperative, supplying clean power to more than 111,000 customers, of which about 9,000 are businesses. It is organised as a cooperative with 23,000 members whose contributions provide a solid equity capital base.

Through its subsidiary Planet Energy it also builds its own power plants, and has 11 wind farms (see photo) and three photovoltaic plants totalling 65MW are already in operation.

GPE has appointed Dr. Dörte Fouquet at the Becker Büttner Held law office, specialists in this area, to prepare the application for the plea for annulment and assist in subsequent proceedings.

In coming weeks, Greenpeace Energy will also review the possibility of joining forces with other stakeholders in Germany's energy market for bringing legal action as a collective.



Principal source: Greenpeace Energy.

Oliver Tickell edits The Ecologist.

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