Nuclear Energy Projects Financing Option with Contracts for Difference: The Perspective from European Union State Aid Modernisation

Laura Rimšaitė

Abstract


This article deals with the question related to intercourse between the promotions of foreign investments in energy sector, and therefore, with several obstacles according to European Union State aid rules. There is a close relationship between the cost structure of nuclear power, the long-term safety and financial risks associated with some elements of the nuclear fuel cycle, and the high market risk that investors have placed on the technology since its inception. The construction phase of Nuclear Power Plant is considered the most risky for investors, especially for a new nuclear program. Large amounts of capital must be invested early on, while returns will not begin to flow until the plant enters operation some years later. The recent development of State Aid modernisation process at the EU provides more flexibility to implement various financing models, which are crucial for energy infrastructure projects. This paper analyses the recent development in the United Kingdom electricity legislation currently an option to adopt Contracts for Difference model to Hinkley Point C Nuclear Power Plant project and its relation with State aid rules in the light of modernisation process.

Keywords


competition law; nuclear power plant; contracts for difference; state aid modernisation; investments; power purchase agreements

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DOI: http://dx.doi.org/10.13165/IE-13-7-4-04

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"Intellectual Economics" ISSN online 1822-8038 / ISSN print 1822-8011