The UK is to guarantee £2bn of Chinese investment in the Hinkley Point C nuclear project in a deal which could see China take the lead in furthe nuclear projects, but there is still no indication on when a final investment decision will be taken on the project.
Chancellor of the Exchequer George Osborne has announced that the government will guarantee a £2bn deal under which China will help fund the cost of building the proposed Hinkley Point C nuclear reactor on the Somerset coast. Projected to cost some £24.5bn, Hinkley C is scheduled to be the first of the UK’s new fleet of nuclear power stations, and the first built in the country since Sizewell B in the 1990s.
Osborne made the announcement during an official tour of China, and his colleague Amber Rudd, secretary of state for energy and climate change, said that China is expected to take the lead on further nuclear projects, including a power station at Bradwell in Essex, which could be Chinese-designed.
The funding guarantee will be met from Infrastructure UK, a unit within the Treasury that co-ordinates and simplifies planning and prioritisation for UK infrastructure projects. The money will assist EDF, which is building the plant, to meet the enormous building costs. It is not known what proportion of the total cost Chinese finance is expected to reach, and although EDF chief executive Vincent de Rivas welcomed the announcement, he said only that it represented ‘further progress towards a final investment decision’, he did not indicate how far off that decision might be or when work might begin in earnest on the power station (ground works have already begun, but no concrete has been poured). The European Commission approved the project last year while UK planning consent was granted in 2013.
Hinkley C is to be a European Pressurised Water (EPR) reactor, designed by EDF subsidiary Areva. No EPRs have yet been completed: the demonstration reactor, at Flamanville in Normandy, is now three years late coming on-stream and latest estimates put its start-up date in the fourth quarter of 2018; the project is already £5.2bn over-budget. Another plant under construction, at Olkiluoto in Finland, is also beset by delays, and may not come on-stream until 2020: ten years behind schedule. The first EPR units to become operational may be in China, at Taishan; current estimates say these two reactors may start by the end of this year.
The government has already agreed to help meet the costs of Hinkley C by paying £89.50/MWh for the electricity it produces if EDF also decides to build an EPR station at Sizewell in Suffolk, and £92.50/MWh if it does not.
“Nuclear power is cost competitive with other low carbon technology and is a crucial part of our energy mix, along with new sources of power such as shale gas,” Osborne said. “So I am delighted to announce this guarantee for Hinkley Point today and to be in China to discuss their investments in Britain’s nuclear industry. It is another move forward for the golden relationship between Britain and China – the world’s oldest civil nuclear power and the world’s fastest growing civil nuclear power.” Amber Rudd indicated that talks between the government and EDF would continue, and stressed the importance of the project to the UK, pinpointing the 25,000 jobs Hinkley C is projected to create and the six million homes to which it is expected to supply power.