EU accepts Britain's costly subsidy system to finance new $26 billion nuclear power plant

The European Union's competition watchdog has accepted Britain's bid to heavily subsidize the construction and operation of a new 16-billion pound ($26 billion) nuclear power plant.

The EU's executive Commission said Wednesday the subsidies, which include guaranteeing the plant operator a fixed above-market electricity price for 35 years, won't unduly distort fair competition.

The decision was controversial as the EU seeks to switch its electricity supply to renewable sources like wind and solar energy. But securing approval for the two reactors at Hinkley Point in Somerset, due to be operational in 2023, was a top priority for the British government as it seeks to modernize its energy supply.

Analysts say building new nuclear power plants isn't economically viable without state subsidies.