EU considers allowing "state aid" for nuclear
An internal draft of guidelines being discussed for energy aid within the European Commission has been provided to Renewables International. It shows that Brussels is considering including nuclear as a legitimate recipient of state aid because of the Euratom Treaty.
State aid is the EU term for what lay people commonly call subsidies. The EU is very concerned about protecting the free market; after all, the EU is partly all about the free movement of citizens (at least within the Schengen zone), but also about free trade within member states: the Single Market. And the Commission has the authority to outright ban actions taken by member states if found to constitute state aid.
The discussion paper "containing draft Guidelines [sic] on environmental and energy aid for 2014-2020" shows that, in updating its guidelines from 2008 (PDF), which do not mention nuclear at all, the EU is looking into specifying the rules under which state aid could be allowed for nuclear power.
The EU has targets for renewables, so there is always been some justification for policy incentives for renewables. The consultation paper therefore clearly states that investment in nuclear energy "is an objective covered under Article 2(c) of the Euratom Treaty and therefore the Commission does not question that such support measures are aimed at a common EU objective."
In 2001, the ECJ ruled that German feed-in tariffs for renewables did not constitute state aid partly because they are manufacturer-neutral, meaning that investors are free to purchase whatever technology they want from whatever country. That same year, the Commission gave the green light to a number of countries for capacity payments for conventional power plants to cover "stranded costs" in the early years of market liberalization with an eye to "ensuring the security of energy supply," as the Commission put it.
The section on "Capacity mechanisms [ and aid to nuclear energy]" (italics in original) says that any capacity payments to nuclear must be designed so that "other Member States (can) participate in the capacity mechanism" and specifies a number of other requirements, such as a priority on interconnection capacity between neighboring member states. The justification also has to be clearly defined as ensuring power reliability, "for example as relating to lack of peak load capacity, short-term flexibility, or network bottlenecks." Elsewhere, the "need for state intervention" is used synonymously with a "market failure which causes the inability of the market to deliver investment in nuclear energy production on its own"; "the low-carbon nature of nuclear energy" is one goal that can be thus addressed.
Again, we are only dealing with proposals here, but clearly the EU is seriously considering allowing capacity payments for nuclear towards ensuring the reliability of de-carbonized power supply; the recent news about feed-in tariffs for nuclear in the UK are thus taking place within this high-level discussion.
Tomorrow, we look into what the Commission is discussing about state aid for renewables – essentially, throwing out feed-in tariffs. (Craig Morris)