With the government locked in negotiations with the EU over its Electricity Market Reforms (EMR) nuclear is understandably where most of the tension between the UK’s reforms and the EU’s market structure has initially been focused - though this isn't the only problem - see our analysis of the tension between the UK's reforms and the EU.
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Here are four reasons the government's support for nuclear may run into trouble with the EU, and two (very strong ones) why it may not.
1) It's state aid
As Malcolm Keay from the Oxford Energy Institute explains governments are not meant to unfairly advantage their own suppliers by providing them with any form of state help.,
In practice the EU has allowed a number of exemptions to this.
Feed in Tariffs for renewable energy are often paid directly by consumers through their bills - so the European courts have ruled in the past that this didn’t classify as ‘state aid’.
But the UK’s proposed support mechanism for low-carbon power “Contracts for Difference” (CfDs) involve the state as the ultimate backstop should energy companies not be able to pay, that is likely to make it state aid.
2) It's not commonly agreed by EU member states
The EU commission also has the right to allow governments to give state aid under certain conditions - for example if it is to help meet commonly agreed environmental objectives.
There is legally binding target to get 20% of our energy from renewable sources across Europe by 2020, for example. But there is no agreed target for nuclear - or even ‘carbon free’ power.
The EU guidelines for allowing state aid are also meant to encourage temporary support to new technologies - like offshore wind.
The idea is that they are not yet ready to compete so need a little extra help to move down the cost curve and the distortion to free market competition is not permanent.
Nuclear may have new reactor designs, but that is unlikely to sway the commission. Onshore wind and solar PV may soon encounter similar problems and subsidies for both are falling fast.
3) The support lasts a long time
Duration is also an issue. If you are looking to prevent permanent distortions to competition a proposed 40 year contract for a huge nuclear plant is particularly unappealing.
A paper prepared for the EU Green party by Greenwich academic Steve Thomas and lawyer Dorte Fourqet suggests UK support for nuclear is very unlikely to pass.
And two reasons why it may not be a problem.
1) Nuclear power has its own treaties
Nuclear’s long history includes a number of international agreements (including the TFU, TFEU and Eurotrom treaty) allowing investment in nuclear power, which may allow exemptions to the usual state aid rules.
2) The UK could reach a deal
It is, in practice, relatively unlikely that the EU would block a key part of a member state's energy policy. Not only may the UK reach a stop-gap deal, it could also fight to change overall EU policy to be more supportive of low-carbon technologies, including nuclear, rather than just renewables.
