The long-awaited final green light for the Hinkley Point C nuclear power plant has inched closer again after chancellor George Osborne announced a £2bn guarantee for the project.
Osborne revealed the government guarantee, provided by Infrastructure UK, while on a tour of China.
His announcement comes just days after Hinkley Point C promoter EDF Energy pledged that the power station would be delivered on time and on budget despite the long wait for a final investment decision.
EDF Energy chief executive Vincent de Rivaz said this morning: “The chancellor’s approval of the infrastructure guarantee is 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 UK are demonstrated by this good news.
“It is further progress towards a final investment decision on a project which will provide reliable, affordable low carbon electricity for decades.”
Osborne said: “Britain was the home to the very first civil nuclear power stations in the world and I am determined that we now lead the way again.
“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.
“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.”
The initial guarantee is set to cover about £2bn of investment and could finally pave the way for a final investment decision by energy company EDF, supported by China General Nuclear Corporation and China National Nuclear Corporation. Such a decision was originally expected last year.
Further amounts could be guaranteed in the longer term.
The agreement also boosts work being carried out under a memorandum of understanding on fuel cycle collaboration signed with China in 2014, which has the potential to leverage UK expertise in waste management and decommissioning as well as support UK growth.
A series of hurdles have already been negotiated by Hinkley Point C.
The European Commission approved the Hinkley Point C state aid case in October 2014. The £2bn is covered by that approval with further amounts available should EDF meet certain conditions and subject to fuller government approvals.
The strike price for Hinkley Point C is £89.50/MWh fully indexed to the consumer price index. If a final investment decision is not taken on Sizewell C, the strike price for Hinkley Point C will be £92.50/MWh.
The contract for difference payment duration for each reactor is 35 years. The contract term for a reactor will be reduced if that reactor does not reach its start date within its target commissioning window.
EDF in July awarded £1.3bn of work on Hinkley Point C.
A Bouygues/Laing O’Rourke joint venture was previously named preferred bidder for the £2bn main civils package at Hinkley Point C, while Costain is preferred bidder for the £250M marine pipeline work. A Kier/Bam Nuttall team secured the earthworks deal, which includes excavation of the massive basement in which the nuclear island will sit.