The European commission (EC) on Wednesday gave the green light to a subsidy scheme that will enable the first new nuclear reactors to be built in Britain for nearly 20 years.

But the EC claimed that the decision had been made only after the financial arrangements put forward by the UK had been substantially modified to save cash for the British taxpayer.

The majority decision by a full assembly of 28 commissioners is the last regulatory hurdle for EDF Energy and its £16bn plan to construct Hinkley Point C in Somerset, south-west England.

The Austrian representative spoke out against the deal and his country has previously promised to launch legal action to halt the scheme – the first since Sizewell B was built in Suffolk.

Joaquín Almunia, the EC’s vice-president in charge of competition policy, earlier oversaw a stinging report criticising the Hinkley subsidy arrangements from the Department of Energy and Climate Change (Decc).

But today he said: “After the commission’s intervention, the UK measures in favour of Hinkley Point nuclear power station have been significantly modified, limiting any distortions of competition in the single market.

“These modifications will also achieve significant savings for UK taxpayers. On this basis and after a thorough investigation, the commission can now conclude that the support is compatible with EU state aid rules.”

There was little explanation from the EC on what exactly had been changed, argued critics. The basic deal allowsthe French-owned electricity generator to be guaranteed £92.50 per megawatt hour over the 35-year life of the Hinkley plant. This subsidy, twice the current price of electricity, will be paid out of household energy bills.

Greenpeace said the EC move was a “world record sell-out” to the nuclear industry at the expense of taxpayers and the environment. “It’s such a distortion of competition rules that the commission has left itself exposed to legal challenges,” said Greenpeace EU legal adviser Andrea Carta.

“There is absolutely no legal, moral or environmental justification in turning taxes into guaranteed profits for a nuclear power company whose only legacy will be a pile of radioactive waste. This is a bad plan for everyone except EDF.”

But Lord Hutton of Furness, chairman of the British Nuclear Industry Association, said he was pleased. “This is an important step in securing the UK’s home-grown low-carbon electricity generation, while adding jobs and prosperity to the economy.”

Commenting on the future for nuclear subsidies, Ed Davey, UK energy and climate change secretary, said: “All low carbon [power] at the moment, whether its nuclear, carbon capture and storage, offshore wind etc. is getting support. The question is can we reduce that support as quickly as possible and that is what the electricity market reform is designed to do.

“Do I think it will go to zero [subsidies]? I don’t know, because I can’t tell the future. But what I do know is that, with the mechanism we’ve got, it will reduce the cost of supporting low-carbon, in all its different forms, to the lowest imaginable because we are bringing in competition in the market.

“We are in the early stages of decarbonisation and taking a low-carbon option off the table now doesn’t look terribly clever.”

EDF, in cooperation with the Chinese is at the forefront of plans to build new reactors, but other companies have also made clear they want to follow suit.