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EDF will get £92.50/MWh for power generated at Hinkley Point C nuclear plant over 35 years, the Department of Energy and Climate Change (Decc) confirmed on Monday.
The “strike price”, which covers decommissioning, will be cut to £89.50/MWh if they make a final investment decision to go ahead with another power station at Sizewell. The reduction is on the basis EDF could share first-of-a-kind costs of the European Pressurised Reactors across the two sites.
Investors, which last week were revealed to include China General Nuclear Power Corporation, are expected to make a return of 10 per cent on Hinkley Point C, the projected cost of which has risen from £14 billion to £16 billion.
The 3,260MW plant could be built by 2023 and will provide power for nearly 6 million homes, EDF said.
Prime minister David Cameron said the deal was “brilliant news” and made it clear Britain is “open for business”.
He added: “This also marks the next generation of nuclear power in Britain, which has an important part to play in contributing to our future energy needs and our longer term security of supply”.
Decc claims building a new fleet of nuclear power stations could cut bills by more than £75 a year in 2030, compared to an energy mix that does not include nuclear.
Energy secretary Ed Davey said the deal was competitive with other large-scale low carbon and gas power generation.
He said: “We are creating one of the most attractive electricity investment markets in the world – and this is a clear sign that investors are already responding, even before our electricity market reforms become law.”
The long-awaited deal includes arrangements to share gains with customers if investors benefit significantly from refinancing, equity sales or lower construction costs.
It also protects investors against certain political risks. They get compensation if government shuts down the plant for non-safety reasons, curtails generation or withdraws insurance cover.
The agreement is not yet legally binding and must get State Aid clearance from the European Commission.
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