David Cameron has hailed the “historic deal” which has enabled the £16bn Hinkley Point C nuclear power station to go ahead.
The prime minister said the agreement signed by energy firm EDF and China General Nuclear Corporation (CGN) today signals the green light for the Somerset mega-scheme.
Under its terms, EDF will take a 66.5% stake in Hinkley Point C, with CGN taking the remaining 33.5%.
Cameron said: “I’m pleased to announce that we are signing an historic deal to build the Hinkley nuclear power station, providing reliable, affordable energy for nearly 6M homes and creating more than 25,000 jobs, all while working together to build a low-carbon future.”
Energy secretary Amber Rudd added: “We are tackling a legacy of under-investment and building energy infrastructure fit for the 21st century as part of our plan to provide the clean, affordable and secure energy that hardworking families and businesses across the country can rely on now and in the future.
“The UK is open for business and this is a good deal for everyone.”
EDF Energy chief executive Vincent de Rivaz said: “Hinkley Point C and successive nuclear projects will guarantee the UK the reliable, secure low carbon electricity it needs in the future.
“Nuclear power will save customers money compared with other energy options and provide a huge boost to British industrial strength, jobs and skills both in Britain and abroad. Today’s announcements are also good news in the fight against climate change.”
However, Association for Consultancy and Engineering chief executive officer Nelson Ogunshakin raised “fundamental concerns” about the first new nuclear project in the UK for 20 years.
“It is good news that the Chinese have chosen to invest in the Hinkley Point C nuclear power station, however it is important we do not lose sight that this is important infrastructure for UK and there remain fundamental concerns,” he said.
“Firstly, this is a huge opportunity for the UK to lay the foundations for a new generation of skilled workers and become a world leader in new nuclear technology that can be exported around the globe. We have seen the construction sector blaze a trail in projects like the Olympics and Crossrail, and it is crucial we do not waste this golden chance.
“Secondly, the government must take an even stronger position on why this project is vital and represents good value for money for the public over the long term. Serious questions are already being asked about the agreed strike price, which could foster uncertainty among investors as well as construction firms, and undermine the whole project. With UK power generation dropping to levels that can only just meet peak demand in the coming years, any further delays would put at risk the country’s reputation and its position in the global economy.”
Chancellor George Osborne last month announced a £2bn government guarantee for Hinkley Point C while on a tour of China.
The European Commission approved the Hinkley Point C state aid case in October 2014. The £2bn is covered by that approval and further amounts could be made available should EDF meet certain conditions and subject to fuller government approvals.
The strike price - the price at which the power station sells electricity to the National Grid 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 rise to £92.50/MWh.
The payment agreement will run over 35 years. The contract term for a reactor will be reduced if it fails to reach its start date within its target commissioning window.
EDF in July awarded £1.3bn of work on Hinkley Point C. A joint venture of Balfour Beatty and NG Bailey secured a £460M electrical package, while the mechanical work went to a team of Bristol-based Cavendish Nuclear with French firm Boccard. Laing O’Rourke won a contract to provide worker accommodation. All these deals were subject to a final investment decision from EDF.
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.