£2bn government guarantee for Hinkley Point C

Chancellor George Osborne has announced that the United Kingdom will guarantee a £2billion deal under which China will invest in the Hinkley Point nuclear power station.

Mr Osborne said nuclear power was “a crucial part” of Britain’s energy mix and hailed a “golden relationship between Britain and China – the world’s oldest civil nuclear power and the world’s fastest growing civil nuclear power”.

BEIJING – Britain pledged £2bn on Monday for a nuclear plant set to be built in England by a consortium, including Chinese firms, which would be the country’s first such new power station in decades.

The United Kingdom will need to replace about a quarter of its capacity due to ageing nuclear and coal power plants retiring.

The initial backing from the government would pave the way for the construction of Britain’s first new nuclear power station for a generation, Osborne said, as he redoubled his arguments for nuclear in the face of opposition from environmental groups.

Under the terms of the deal, EDF Energy and project partners will be guaranteed a price of £92.50 ($151.25) /MWh, representing double the current market price of electricity, by the UK Government, over a period of 35 years.

Hinkley Point had originally been meant to start producing power by 2023, but EDF, which is leading on the project, has said that will be put back pending a final funding decision later this year.

It is also hoped the construction and operation of the plant will create thousands of jobs in Somerset.

‘It is further progress towards a final investment decision on a project which will provide reliable, affordable low-carbon electricity for decades.

Vincent de Rivaz, EDF Energy chief executive said: The Chancellor’s approval of the infrastructure guarantee was a clear sign of the government’s commitment to Hinkley Point C. The government’s determination to bring about a renewal of infrastructure and to attract inward investment to the United Kingdom are demonstrated by this good news.

Mr Osborne said: ‘Britain was the home to the first civil nuclear power stations in the world and I am determined that we now lead the way again’.

Aside from hesitation among potential funders, Hinkley Point C has plenty of opponents too who’d love to see the project derailed. The Austrian government has filed a legal complaint against state subsidies for the Hinkley Point nuclear plant to the European Court of Justice.

Doug Parr, chief scientist for Greenpeace United Kingdom , said the loan guarantee announcement was “a PR smokescreen to give the impression that this project is moving forward when it’s actually bogged down in a swamp of troubles”.

Originally projected to cost around £10bn it will now cost some £25bn.