UK Government announces £2 billion support package for new nuclear plant
21 September 2015
UK Chancellor George Osborne, who is on an official visit to China, said the UK Government will provide loan guarantees of £2 billion for the country’s first new nuclear power station in 20 years, Hinkley Point C in Somerset, which French energy group EDF is planning to build with two Chinese partners.
Artist's impression of Hinkley Point C - Image: EDF Energy
“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,” he said. “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.”
Speaking in Beijing at a joint news conference with China's Vice-Premier Ma Kai, Osborne also announced a new £50m joint research centre for nuclear energy.
No final investment decision has yet been taken by EDF and its Chinese partners. There has been speculation that a final announcement could be made during a planned state visit to the UK in October by Xi Jinping, the Chinese president.
The project has been criticised because of the ever-increasing estimated cost of construction, Government-guaranteed prices more than double the present wholesale price of electricity and repeated delays and cost overruns at nuclear plants in France and Finland using the same reactor technology.
When first proposed in 2008, the two reactors at Hinkley were expected to cost about £5.6 billion to build and to be in service by the end of 2017. EDF recently acknowledged that the station would not enter service before 2024, and the European Commission has estimated that its total cost will be £24.5 billion.
Vincent de Rivaz, the chief executive of EDF Energy, said that the finance guarantee was "further progress towards a final investment decision on a project which will provide reliable, affordable low-carbon electricity for decades.”
UK Energy Secretary Amber Rudd said: “Today’s guarantee is an important step forward for the first new nuclear power station in a generation and the future of our home-grown energy supplies. We will continue to work with EDF to finalise the Hinkley deal, which will power nearly six million homes and create more than 25,000 jobs.”
Rudd also called for closer direct nuclear cooperation between the UK and China, telling the Financial Times she wanted Beijing to take the lead in developing new nuclear plants in Britain.
She said China could lead the construction of a new Beijing-designed nuclear station at Bradwell in Essex, as well as at other sites.
In response to the Government announcement, Dr Jenifer Baxter, Head of Energy and Environment at the Institution of Mechanical Engineers, said:
"This development is welcome news and long overdue. Nuclear is set to play a central and vital role in the UK’s energy future.
"Government now needs to push forward with the development of other nuclear power sites, in places like Wylfa and Oldbury as well as other types of nuclear, like Small Modular Reactors (SMRs). SMRs present a lower cost option, with comparatively straightforward construction and, potentially, a more attractive investment proposition. They would be factory-manufactured and assembled on site, and likely cost in the region of £1-2 billion.
"Whilst the development of a new nuclear power station is positive news, the Government must encourage significant investment in the whole nuclear fuel life-cycle. Investment in research and development to understand further the nature of radioactive waste, the potential for further energy production both heat and power and the opportunities for reducing radioactive half-life are all vital in developing a safe nuclear industry.
"Concerns over the disposal and long-term management of these wastes must also be addressed, with proper testing for geological disposal of radioactive wastes taking around 20 years. The Government must also take steps to secure potential sites for disposal with long-term testing strategies, without which nuclear power generation will continue to leave a significant waste challenge for future generations."