# Commission Decision (EU) 2015/658 of 8 October 2014 on the aid measure SA.34947 (2013/C) (ex 2013/N) which the United Kingdom is planning to implement for support to the Hinkley Point C nuclear power station (notified under document C(2014) 7142) (Only the English version is authentic) (Text with EEA relevance), Division

Extent: E+W+S+N.I.

Table 13
Benchmark Power Purchase Agreement (PPA) projects
In tenders for Independent Water and Power Producer (IWPP) contracts in Abu Dhabi, which include a 20 year fixed-price water/power purchase agreement with inflation indexation, ‘the nominal internal rate of return (IRR) on equity is required to be not less than 13 per cent’. These projects will typically involve construction of technically — mature CCGT capacity under a lump sum, date-certain turnkey EPC contract, with provisions to compensate investors for any delays and deviations from the terms of the contract. See Independent water and power producers, Abu Dhabi Regulation & Supervision Bureau, http://rsb.gov.ae/assets/documents/231/infoiwpp.pdf. (Source: UK submission)
http://www.gdfsuez.com/wp-content/uploads/2012/07/GDF-SUEZ-at-a-glance-060712-final.pdf Slide 8
While the UK's submission quotes 9-15 per cent post-tax nominal rates of returns from the source given in (2), the Commission notes that this seems to ignore the ‘regulated and concession’ projects mentioned in that source. The Commission understands from (2) that the regulated and concession activities of GDF-Suez are indicated to realise around 5-13 per cent post-tax nominal project returns, with the most likely range being below 10 per cent.
Source: UK submission, Table 2 — on Rate of Return, 10th September as well as (1) and (2) below.
Technology
CCGT
PPA projects
Gearing
< 80 per cent
Unknown
Cost of debt
Unknown
Unknown
Nominal target return on equity (post-tax)
> 13 per cent
Nominal target project return (post-tax)
9-15 per cent
Investment horizon (asset life)
25 years
Various
Investment size
Various
Various
Degree of revenue certainty
20 year PPA
PPA
Level of construction risk compared to HPC
Lower-EPC contract-based, well-known technology
Unknown but likely lower
Level of operating risk compared to HPC
Lower
Unknown
Level of financing risk
Lower shorter construction period
Unknown but likely lower
Contingent equity required
Unknown
Unknown
References

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Source: https://www.legislation.gov.uk/eudn/2015/658/annex/A/division/11 (the official version)
Page: https://openlegislation.uk/eu-decision-2015-658/annex-A/division-11
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.