The Treasury is proposing to charge between £225 million and £250 million to underwrite up to £10 billion worth of project finance, according to a report in the Times. The guarantee is intended to reduce the risk to investors and EDF Energy’s financing costs.
The price must be set at a “commercial rate” to stand a chance of getting state aid approval fromBrussels.
The European Commission is investigating the support package for Hinkley Point C, which includes a guaranteed power price of £92.50/MWh for 35 years. In an initial view, the Commission raised doubts over whether the proposed support addressed a genuine market failure. However, the UK government and EDF Energy express confidence the plans will be approved.
Subject to state aid approval and construction, Hinkley Point C is scheduled to start generating in 2023.
EDF Energy declined to comment, citing commercial sensitivities.