Chinese agree to input a third of investment in key UK nuclear power plant

Jinping Xi

Reports are emerging that France’s EDF and China’s CGN have come to agreement on the sharing of investment in the à‚£24.5bn Hinkley Point C nuclear power project.

According to reports in both the Daily Telegraph and Financial Times the parties are set to announce on Wednesday the news that 33.5 per cent of the nuclear power plant project will be owned by the Chinese state-owned nuclear giant.
The announcement is expected to deliver the key momentum for a final investment decision to be announced by year-end and ultimately see the plant become operational by 2025, eight years after originally planned.

A lengthy EU state aid inquiry, protracted talks on investment and the near failure of France’s Areva, which will supply the troubled European Pressurised Reactor technology used in the plant have contributed to the delays, with further objections from Austria and Luxembourg still not yet resolved.

Chinese President Xi Jinping is currently on a four-day state visit to Britain, and he and Prime Minister David Cameron are due to attend a UK-China business summit tomorrow (Wednesday) at Mansion House, where the deal is expected to be confirmed. It will be the commercial centrepiece of Mr Xi’s visit this week. A second Chinese nuclear group, CNNC, will be involved in the project as a joint venture partner.

Under the subsidy deal, Hinkley’s owners will be guaranteed à‚£92.50 for each megawatt-hour of power the plant generates for the next 35 years ” roughly double the current market price of power, with the difference “topped up” by consumer-funded subsidies. If the market price of power ever exceeds the guaranteed price, which will be index-linked, EDF will pay back the difference.

EDF has been unable to attract outside investors to the Hinkley project, with group chief Jean Bernard-Levy admitting some are deterred by the example of delays and cost overruns seen in the construction of EDF’s EPR reactor design in France and Finland.

There will be no other investors in Hinkley, with EDF hoping to attract further investors and sell down its stake once construction is under way.

This week’s accord is also expected to include a reference to future co-operation with the Chinese on two further nuclear plants, Sizewell in Suffolk and Bradwell in Essex.

China wants to use Bradwell to showcase its own reactor technology and would take the lead on that project, submitting a design to UK regulators.

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