The UK will provide £2 billion of initial support for a new nuclear power station at Hinkley Point in southwest England, Chancellor George Osborne has announced on a trade visit to China, which is backing the project.
The price guarantee will pave the way for French utility EDF, and its financial partners China General Nuclear Corp and China National Nuclear Corp, to give the go-ahead to the £16 billion scheme later this year, the government said.
Osborne said: “Britain was home to the very first civil nuclear power stations in the world and I am determined that we now lead the way again.
“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.”
Britain won approval from Europe to guarantee the price of power from the new plant, its first nuclear power station in decades, in a landmark ruling last October.
EDF will receive a guaranteed price of £92.5 per megawatt hour for 35 years for output from Hinkley Point C, which is expected to produce enough energy for around six million homes – 7% of Britain’s needs.
The price guarantee, which is about twice the current wholesale price of electricity, has been challenged by EU member Austria, which says it goes against the EU’s aim to support renewable energy.
Lisa Nandy, the Labour Party’s newly-appointed shadow energy minister, raised concerns over the cost of the project.
She said: “Hinkley Point C is on course to become the most expensive power station ever built. This project could leave Britain’s bill payers paying over the odds for decades because ministers have negotiated such a bad deal.
“There is a role for new nuclear power stations to provide us with low-carbon power supplies but not at any any cost. [It’s] very troubling that the government has agreed these extra nuclear subsidies at the same time it’s cut support for more affordable clean energy technology.”
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