“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,” Osborne said. “So I am delighted to announce this guarantee for Hinkley Point today and to be in China to discuss their investments in Britain’s nuclear industry. It is another move forward for the golden relationship between Britain and China.”
Osborne made the announcement during an official tour of China and Secretary of State for Energy and Climate Change, Amber Rudd, said that China is expected to undertake the development of further nuclear projects in Britain, including a reactor at Bradwell in Essex.
The funding guarantee will be met from Infrastructure UK, to assist EDF to meet the building costs. EDF announced in February that it had pushed back its decision on whether to invest in the plant as it could not afford the estimated £24.5bn cost on its own.
Hinkley is to be a European Pressurised Water (EPR) reactor, designed by EDF subsidiary Areva. It is due to come on-stream in 2023 and provide 7% of Britain’s energy needs for 60 years.
No EPRs have yet been completed: the demonstration reactor in Normandy is three years late coming on-stream and latest estimates put its start-up date at the end of 2018; the project is already £5.2bn over-budget.Another plant under construction in Finland is also beset by delays, and may not come on-stream until 2020: ten years behind schedule.
The government has already agreed to help meet the costs of Hinkley by paying £89.50/MWh for the electricity it produces if EDF also decides to build an EPR station at Sizewell in Suffolk, and £92.50/MWh if it does not.
Ms Rudd rejected criticisms that this was too expensive, saying nuclear power was "reasonably priced" compared with other low carbon sources of power. "We want low-carbon electricity and if we're going to hit our ambitious emissions reduction targets then we have to have nuclear," she added.
Views shared by Dr Jenifer Baxter, head of energy and environment, at the Institution of Mechanical Engineers: “Although the financial costs of nuclear power seem high this power station will provide and modernise the diversification we so badly need in ensuring the UK’s lights stay on.
“Nuclear is currently one of the least CO2-intensive ways to generate base-load electricity.It is a vital part of the electricity mix we need in addition to gas-generation and renewables. At present, there is no viable alternative that will enable us to meet our emission targets.”
Hinkley is projected to create 25,000 jobs and to power six million homes.
