Hinkley Point: Deal secured over EDF nuclear electricity price
Energy Secretary Ed Davey has hailed a landmark deal to build Britain’s first new nuclear plant in a generation.
The agreement with French-owned EDF Energy will see Hinkley Point C begin operating in 2023.
But ministers are likely to face criticism over the £92.50 per megawatt hour that will be paid for electricity produced at the Somerset site – around double the current market rate.
The so-called ’strike price’ could fall by £3 if another mooted development at Sizewell goes ahead, allowing for efficiencies in development and testing.
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The contract is due to run for 35 years, with the electric price increasing annually in line with CPI inflation. At full capacity the two reactors could provide up to 7% of the country’s energy needs.
It is understood that China General Nuclear Power Group and China National Nuclear Corporation will be investing in the estimated £14 billion scheme.
One of the last stumbling blocks to a deal was removed last week when Chancellor George Osborne announced that Chinese firms would be allowed to invest in civil nuclear projects in the UK – even potentially taking a majority stake.
Mr Davey insisted he had secured “good value” following more than a year of intense negotiations. The project will cut the UK’s carbon emissions by nine million tonnes a year, and create thousands of jobs.
“We think it would be good value if (the strike price) was a little higher,” the Liberal Democrat Cabinet minister said.
“I was determined to get them below £90 so I could prove to everybody we had got a good deal...
“What has driven a tougher deal is the fact that I made clear we could walk away from the table. We had other nuclear options.”
He added: “We have got an early start on our long-term energy needs.”
Mr Davey stressed that the construction risks were being borne by the companies, and the Government would not be on the hook for any overspends.
All decommissioning and waste management costs are also included in the deal, he said.