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Negotiations over the terms for a new nuclear plant at Hinkley Point have come down to "one or two issues" including the guaranteed power price, according to energy secretary Ed Davey.
Speaking to the Guardian, he said he is “not going to budge an inch” on the contract for difference (CfD) strike price he will agree with EDF.
Davey described it as a personal test to make sure the terms did not represent a subsidy to the nuclear industry.
“My main job is to make sure that this deal works for the British consumer and for British industry,” he said. “We have made a hell of a lot of progress in our negotiations but we are not there yet. We are down to one or two issues, including the actual price. I am not going to sign any deal with EDF unless it is value for money, is affordable and meets the coalition agreement of no public subsidy. These are our tests and we are going to meet them.”
The contract is expected to guarantee inflation-linked returns for EDF over 35 years. Hinkley Point C is a critical part of the French energy company’s business plan.
EDF has been widely reported to be seeking a strike price of £95-£100/MWh, while government is aiming closer to £80-85/MWh. However, Davey said he did not recognise the figures bandied around.
The government announced recently it would underwrite £10 billion worth of loans towards the £14 billion power plant. Yet Davey insisted the consumer and taxpayer would not bear the risk of construction overruns.
If EDF cannot sign up to his terms, he intimated other investors will. He emphasised the progress made with Hitachi’s Horizon project, as well as with other options such as carbon capture and storage and renewables.
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