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UK government strikes Hinkley Point C deal
- 10 years ago (2013-10-21)
- Junior Isles
The UK government and EDF Energy have agreed the Contract for Difference, which will determine the price consumers will pay for the electricity generated by the proposed Hinkley Point C nuclear power plant.
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The strike price will be £89.50 per megawatt hour if a further project at Sizewell C goes ahead, or £92.50 without a second nuclear plant. The agreed strike price, which is index-linked for 35 years, includes the wholesale cost of electricity as well as the costs associated with building and financing major new infrastructure.
In addition, the operator will be required by law to fund the full cost of decommissioning and clean up at the end of the plant’s operational life.
Government ministers say the deal will help the UK towards a future of low cost, low carbon energy, with the two reactors planned for Hinkley providing power set for a 60 year lifespan.
Chinese companies China National Nuclear Corporation and China General Nuclear Power Corporation will be minority shareholders in the project.
"For the first time, a nuclear station in this country will not have been built with money from the British taxpayer," said Secretary of State for Energy Edward Davey.
About 25 000 jobs are expected to be created during construction of the power plant, as well as 900 permanent jobs during its 60-year operation.
The Nuclear Industry Association said that new infrastructure of this scale will generate huge socio-economic benefits, tens of thousands of new jobs, and boost the UK’s industrial capability. Hinkley Point C will also make a major contribution towards energy security in the UK as ageing plants are expected to come offline.
Nuclear Industry Association Chairman, Lord Hutton said: “Today’s very welcome agreement confirms to investors and the UK nuclear supply chain that new nuclear build is a reality. This major infrastructure project will give a vital boost to British industry, and create tens of thousands of new jobs and opportunities in construction, manufacturing and operations.
With strong cross-party and public support nuclear energy will make a significant contribution to a balanced energy mix, providing the clean, affordable and reliable electricity that is the bedrock of a successful economy.”
Mr Davey claimed that the Hinkley EDF deal was "competitive" with other large-scale clean energy and gas projects.
However, Dr Paul Dorfman, from the Energy Institute at University College London, said "what it equates to actually is a subsidy and the coalition [government] said they would never subsidise nuclear".
The existing plant at Hinkley currently accounts for about 1 per cent of the UK’s power generation capacity, but this is expected to rise to 7 per cent once the expansion is complete in 2023.
The contract for difference is not yet a legally binding agreement and EDF has until 2014 to make a final investment decision on the project, with the European Commission giving final state aid clearance.