Geert De Clercq and Karolin Schaps Paris and London
Britain has signed a deal with France’s EDF to build a £16 billion (R253bn) nuclear power plant, becoming the first European nation to provide state guarantees to help fund a nuclear project.
The Hinkley Point C project in south-west England, the first new European nuclear plant since the Fukushima crisis, was expected to start producing power from 2023 and would receive a guaranteed electricity “strike” price of £92.50 per megawatt-hour for 35 years, more than twice the market rate, EDF and the British government said yesterday.
The deal demonstrates that nuclear power plant developers require government backing for new projects in Europe, where costs for new atomic energy have surged after regulators imposed stricter safety rules following the 2011 Fukushima disaster in Japan.
An EDF-led consortium would build two Areva-designed 1 650MW European pressurised water reactors (EPRs) that would produce about 7 percent of British electricity, EDF said.
EDF’s long-time Chinese partners, China General Nuclear Corporation (CGN) and China National Nuclear Corporation, will take a combined stake of 30 percent to 40 percent in the consortium, while French state-owned nuclear group Areva will take 10 percent. Discussions are also taking place with a shortlist of other interested parties, which could take up to 15 percent.
CGN is building two EPRs in Taishan, China, and the companies hope their involvement in the British project will give them the credibility to eventually sell Chinese-designed reactors in Europe.
UK Finance Minister George Osborne said during a visit to China last week that Chinese nuclear firms could hold majority stakes in UK plants in future.
“Today we have a deal for the first nuclear power station in a generation to be built in Britain,” British Prime Minister David Cameron said.
EDF said the guaranteed electricity strike price for Hinkley Point could fall to £89.50 if a second nuclear plant at Sizewell, in east England, was built.
The strike price range is roughly double the level of current British wholesale electricity prices, underlining the government’s expectation of an increase in prices.
The government said the construction of new nuclear plants would reduce household energy bills by more than £75 a year in 2030 compared with a scenario where no new nuclear reactors were added.
“[The deal] won’t touch consumer bills, it won’t touch industry bills until 10 years’ time,” British Energy Secretary Ed Davey said yesterday.
Britain needs to replace 20 percent of its ageing and polluting coal and nuclear power plants over the coming decade and securing power supply is a key plank of the Cameron government’s energy policy.
Direct market support for new nuclear plants is unprecedented in Europe since utilities started to be privatised about two decades ago.
Yesterday’s deal includes a clause that would force any future UK government to reimburse EDF for its investments if it decided to shut down Hinkley Point for reasons other than safety or security. – Reuters