UK gives £2bn guarantee on Hinkley

Chancellor George Osborne has pledged a £2 billion guarantee to the Hinkley Point C new nuclear plant ahead of a final investment decision for the long-awaited project later this year.

Osborne began a five day tour of China by promising to back the EDF-led development, in which Chinese firms hold a 40 per cent stake, in a deal worth at least £2 billion.

The UK’s first new nuclear plant in a generation – dubbed the most expensive power plant in the world – has hit multiple hurdles in recent years, but with the backing of the China General Nuclear Corporation and China National Nuclear Corporation a final decision is expected by the end of the year.

Under the terms of the financial support deal outlined by the UK government almost two years ago the consortium will receive £89.50/MWh of energy produced by the Hinkley and Sizewell B projects, or £92.50/MWh if just the Hinkley project moves forward.

A government statement said that its guarantee for the project marks the start of an “unprecedented” collaboration between the UK and China on the construction of new nuclear power stations, and follows media reports two weeks ago that the UK Prime Minister is poised to seal a deal with China next month during the Chinese president Xi Jinping’s visit to the UK.

The deal will reportedly set out an official agreement on the Hinkley project and will also allow China to build a prototype nuclear reactor at a site in Bradwell, Essex.

“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,” said Osborne of the guarantee pledge.

EDF chief executive Vincent De Rivaz said the deal represents “a clear sign” of the UK government’s commitment to the project.

“It is further progress towards a final investment decision on a project which will provide reliable, affordable low carbon electricity for decades,” De Rivaz said.