UK poised for nuclear future

As part of the agreement, EDF will take a 66.5% stake in the £18 billion nuclear project, while China’s CGN will take the remaining 33.5% at a cost of £6 billion.

The deal will also pave the way for further nuclear power stations at Sizewell in Suffolk and Bradwell in Essex.

 “If we are to secure the UK’s energy future, while at the same time meet the country’s challenging emissions target, nuclear must play a part in the electricity mix, in addition to gas-generation and renewables,” said Jenifer Baxter, head of energy and environment at the Institution of Mechanical Engineers.

We are tackling a legacy of under-investment and building energy infrastructure fit for the 21st century

Energy secretary Amber Rudd

Hinkley Point C is expected to generate 3.2GW of power via two Areva 1,630MW European Pressurised Reactors (EPRs). It will also likely be home to two turbine halls, cooling water infrastructure, and waste and fuel facilities including storage.

“We are tackling a legacy of under-investment and building energy infrastructure fit for the 21st century as part of our plan to provide the clean, affordable and secure energy,” said energy secretary Amber Rudd.

Once Hinkley Point C is operational, EDF Energy will earn £92.50/MWh for electricity produced via the Contract for Difference (CfD) mechanism, which has now been finalised with the government.

“Nuclear power will save customers money compared with other energy options and provide a huge boost to British industrial strength,” said EDF Energy chief executive officer Vincent de Rivaz.

Reaching today’s announcement has been anything but easy, however.

Indeed, an investigation that began in December 2013 questioned EDF Energy over the possible breaching of EU competition rules.

In that instance, the European Commission, who led the investigation, eventually cleared the company of any wrongdoing in October last year.

Essentially, the investigation centred on EU rules over state aid,  which examined whether the UK government’s price support of Hinkley Point C  - via its CfD mechanism and its state guarantee for the project’s debt financing - gave EDF Energy an unfair advantage over competitors in the market.

To gain approval, the Department of Energy and Climate Change was forced to agree a number of revisions to its deal with EDF, most notably increasing the amount of profit it could claw back from Hinkley Point C’s operations and taking a share in any savings made on construction costs.