Senior staff at EDF will no doubt be breathing a little easier today with the announcement that China will be investing in the much delayed Hinkley Point C nuclear power station thanks to a £2 billion loan guarantee from the UK Government.
Hinkley Point C has become something of a boondoggle for the government and certainly a headache for EDF. The project has been blighted by delays due to funding problems, safety concerns and, more recently financial and energy experts calling for the project to be scrapped altogether.
The UK government itself has held off making a firm commitment to provide the bulk of the £24.5 billion to build the power plant but today’s announcement seems to be a reasonable show of intent.
Hinkley Point C Concept - image courtesy of EDF
It’s a major gamble by the government and, specifically, George Osborne. In addition to investing £14.7 billion of taxpayer’s money they could be a further £2 billion in the hole if the plant isn’t completed, and they have bet it all on the world’s second biggest economy when it is at its most fragile for 30 years.
The initial loan guarantee is expected to be the first of several if the proposed nuclear power plant proceeds. This new deal is also expected to open the door to further collaboration in the UK and China on the construction of new nuclear power stations. It seems that the UK wants to get in early as China’s strongest economic partner as it recovers from its recent financial landslide.
Many have welcomed the news but others have expressed concern about the UK being tied into paying foreign, state-owned, energy firms billions of pounds instead of investing in cheaper, renewable energy.
Although with a recent proposal to build a wind farm of the coast of Dorset being thrown out, there seems to be very few options available to prop up the British energy industry. Especially as much of the UK’s existing power stations are approaching end of life and E.ON’s Killingholme plant already closing.
The agreement between the UK and China also extends work being carried out 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. There’s also a £50 million joint research centre for nuclear energy as part of the deal as well.
Energy Secretary, Amber Rudd, has also said that the government will continue to work with EDF to finalise the Hinkley Point C deal.
Chancellor George Osborne said: ‘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.’
Vincent de Rivaz, chief executive of EDF Energy, said: ‘The Chancellor’s approval of the infrastructure guarantee is a clear sign of the government’s commitment to Hinkley Point C.
‘It is further progress towards a final investment decision on a project which will provide reliable, affordable low carbon electricity for decades.’
Hinkley Point C is expected to produce 7% of the countries power needs for 60 years however from when remains unclear. The plant’s current completion date of 2023 is likely to drift further the longer it takes to make final funding decisions.
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