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State Aid in Energy under the Spotlight: The Implications of the Hinkley Point Decision

The Implications of the Hinkley Point Decision

Nicole Robins, Tridevi Chakma

State aid issues in the energy sector are more than ever before under the spotlight of the European Commission, as Member States across the EU are seeking to address concerns about the security of supply whilst incentivising low carbon generation and interconnection in order to meet EU 2020 targets. According to the Commission’s official statistics, in 2014, the energy sector was the most subsidised sector in the EU. The well-publicised State aid approval of the package of aid for the construction and operation of a new nuclear power plant at Hinkley Point highlights the role for sophisticated economic and financial analysis in State aid cases. The Hinkley Point investigation has raised the standard for all subsequent aid notifications in the energy sector, but also has wider implications for State aid cases outside of energy. This article discusses the key implications of the Hinkley Point investigation for subsequent aid notifications, focusing on the analysis of market failures and the proportionality of the aid, including the sophisticated mechanisms that were introduced to mitigate the risk of over-compensation. The article concludes by assessing the implications for all subsequent State aid notifications.
Keywords: Aid to nuclear energy; Guarantee; Overcompensation; Renewable energy; Euratom.

Nicole Robins leads Oxera’s State aid work. Tridevi Chakma is a Consultant from Oxera’s corporate finance team who specialises in State aid. Based in Brussels and Berlin, Oxera is an independent economics consultancy with a large State aid practice that has worked on an extensive number of State aid cases across a range of sectors and EU Member States at the cutting edge of the debate for over ten years.


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