European Union regulators have launched an investigation to see if UK plans to subsidise a new nuclear power plant are in line with EU state aid rules.

EDF Energy is set to build a £16 billion nuclear plant (pictured) at Hinkley Point in Somerset for which the UK Government has guaranteed power prices for 35 years.

The European Commission “doubts the project suffers from a genuine market failure” and the inquiry will give third parties an opportunity to comment on the issue. It will assess whether the nuclear plant could be built without support from the government.

Commission Vice-President Joaquin Almunia, in charge of competition policy said: “The UK has notified a mechanism which is explicitly aimed at attracting investment in nuclear energy. It is a complex measure of an unprecedented nature and scale. The Commission therefore needs to investigate thoroughly its impact on the UK and the EU internal energy markets and is requesting all interested parties to submit their observations.”

EDF Energy said it will “engage fully” with the Commission and interested parties during the course of the investigation.

It added in a statement: “This investigation gives the Government and others the opportunity to show that Electricity Market Reform in the UK is essential to deliver the investment needed for the country’s low carbon energy future at a price that is fair for customers. Without this reform, the investment will not take place.”

The Government said the Commission’s announcement is “standard for large investment projects”.

Energy Secretary Ed Davey added: “We will use this period to demonstrate how the project meets state aid rules and provides good value for consumers while cutting carbon in the energy sector.”