“Pivotal nuclear moment” as UK and EDF agree Hinkley Point go-ahead
|Artist’s impression of the completed Hinkley Point C nuclear reactor: construction will involve 5000 people and, once operational, the plant will employ 900 staff and generate 7 per cent of the UK’s electricity
Credit: EDF Energy
“We are kickstarting the renaissance of the nuclear power industry in the United Kingdom.”
So said Vincent de Rivaz, chief executive of EDF Energy, as a deal was struck with the UK government for EDF to go ahead and build Hinkley Point C, Britain’s first new nuclear power plant for more than 20 years.
After more than a year of talks to agree a strike price for Hinkley Point, the government revealed that it will pay EDF £92.50 ($149)/MWh for the new reactor in Somerset, England. This price will drop to £89.50 if EDF goes ahead with a further new reactor at the existing Sizewell nuclear plant.
The strike price is the agreed sum the government will pay EDF for power generated by the plant, and its final figure is almost double the existing price of electricity in Britain.
With the government saying for the past three years that it would refuse to subsidize new nuclear, the strike price is the mechanism by which EDF will recoup the £16bn it will cost to build the plant. EDF will hold a 45-50 per cent stake in the project, with another 30-40 per cent being held by China General Nuclear Corporation and China National Nuclear Corporation and another 10 per cent by French engineering company Aveva, which will design the plant’s reactor.
Hinkley Point is in southwest England and the new plant will provide 7 per cent of Britain’s electricity. During construction it will create 5000 jobs and and once operational will be staffed by 900 people.
UK Energy Secretary Ed Davey said the agreement with EDF over Hinkley was “an excellent deal for Britain and British consumers”.
“For the first time, a nuclear power station in this country will not have been built with money from the British taxpayer.
“It will increase energy security and resilience from a safe, reliable, home-grown source of electricity. This deal is competitive with other large-scale clean energy and with gas – and while consumers won’t pay anything up front, they’ll share directly in any gains made from the project coming in under budget and from refinancing or equity sales.”
EDF group chairman Henri Proglio said the deal “strengthens the industrial and energy co-operation between France and the UK”.
He said: “The project at Hinkley Point represents a great opportunity for the French nuclear industry in a context of a renewal of competencies.
“This project will deliver a boost to the economy and create job opportunities on both sides of the Channel and will enable the UK to increase the share of carbon-free energy in its production mix.”
At a press conference held at Hinkley Point, Davey, Proglio and Vincent De Rivaz provided more detail on the deal.
Davey told the assembled media: “In a deal this size it is right to ask questions, but we have got to make these investments because nearly two-thirds of our electricity-generating capacity is going offline over the next 15 years. We’ve got to replace eight out of nine of our nuclear power stations and almost all our coal power stations.”
He said that “40 per cent of our capacity which is coal power, and 20 per cent which is nuclear, must be taken off, and no government has faced up to making that tough decision until now”.
He added that it would take “6000 wind turbines to produce the power that will come through Hinkley Point C – we cannot do that at the moment”.
“We must replace 60 per cent of our capacity within a short time and that is not possible with just gas – it’s too risky for consumers. Wholesale gas prices have gone up 50 per cent in the last five years, and we don’t want the economy to be reliant on gas, as lots of it is imported.”
Davey stated that the average household energy bill will be £75 lower by 2030 by making the investment in nuclear, and in addition he said the government had ensured that the UK taxpayer was spared the risk associated with failure, as had happened in other countries.
“The construction risks don’t fall on the consumer, so if costs overrun, these will be taken up by EDF and co-investors and not by the consumer.”
The UK’s Nuclear Industry Association said the Hinkley deal will “create a lasting industrial legacy to enable the UK to compete in the global nuclear market, anticipated to be worth £1tn by 2030”.
NIA chairman Lord Hutton – who was responsible for kick-starting Britain’s ambitious nuclear newbuild plans under the previous Labour government – said the agreement between EDF and the government “confirms to investors and the UK nuclear supply chain that new nuclear build is a reality”.
John Cridland, director-general of the Confederation of British Industry (CBI) said it was “a landmark deal which will help us meet our future energy challenges, while boosting jobs and growth”.
He said: “New nuclear plants must be a fundamental feature of our future energy landscape, and Hinkley Point C is the starter gun to securing the investment we need.”
Tony Ward, head of power and utilities at consultants EY (Ernst & Young) said that the announcement “marks a huge step towards delivering a balanced, lower carbon energy mix for future generations of UK energy users”.
He said the UK is now “materially closer to being able to deliver its first new nuclear station in 25 years. This investment will have a lasting positive impact on the UK’s energy independence, its economy, the local communities and the UK’s low carbon aspirations.”
|British Prime Minister David Cameron addresses workers from Hinkley Point A and B power plants as he announces news of the go-ahead for a third reactor at the site.
George Borovas, head of international nuclear projects at global law firm Pillsbury, said the strike price agreement “is a pivotal moment for the UK nuclear industry”.
“Tangible support from governments is one of the most important factors in the development of successful nuclear new build projects.”
Borovas said that the UK “is an environment in which new nuclear can thrive and additional new build projects are likely to follow”.
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