Muckle seeks clarification from DECC on EU State Aid approval

A number of significant electricity generation schemes, that are to receive government funding, are subject to state aid approval by the EU before they can proceed.

The potential short to long term investments are considerable, including:

• the EDF consortium to build new nuclear capacity at Hinkley;
• the early £16.6bn investment contracts offered, with fixed strike prices, to eight low carbon projects; and
• the Contracts for Difference support arrangements for projects under the Electricity Market Reforms package.

These projects are so important to the UK’s energy security and economy that Muckle LLP has sought clarification from DECC on the current position in the approval process and the implications if approval is delayed or not granted.

The response we received from Bill Lacy at DECC in mid-July was non-committal on all aspects, stating “The UK Government notified the European Commission on 22 October 2013 of its State aid case, following our engagement with the Commission on the case since June 2012. The Commission opened a public consultation on 7th March 2014 on their Opening Decision which received an unprecedented number of responses. We are continuing to work with the European Commission to secure State aid approval. In the unlikely event that the Commission does not approve the cases or if there is a delay, we would consider all options available.”

Then, as we finalise this enewsletter, the following announcement was made by DECC: “The new system is designed to bring more competition and encourage private sector investment in low-carbon electricity generation. The budget estimate comes after the European Commission confirmed yesterday that the Contracts for Difference, Capacity Market schemes, and five offshore wind projects supported by early Contracts for Difference, are in line with its rules on state aid.”

For more information, help or advice please contact Andrew Davison on 0191 211 7950.