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UK guarantees £2bn nuclear plant deal as China investment announced UK guarantees £2bn nuclear plant deal as China investment announced
(35 minutes later)
Chancellor George Osborne has announced that the UK will guarantee a £2bn deal under which China will invest in the Hinkley Point nuclear power station.Chancellor George Osborne has announced that the UK will guarantee a £2bn deal under which China will invest in the Hinkley Point nuclear power station.
Mr Osborne, who is in China, said the deal would pave the way for a final investment decision on the delayed project by French energy company EDF.Mr Osborne, who is in China, said the deal would pave the way for a final investment decision on the delayed project by French energy company EDF.
He said it would also enable greater collaboration between Britain and China on the construction of nuclear plants.He said it would also enable greater collaboration between Britain and China on the construction of nuclear plants.
EDF welcomed the news but did not say if it put the project back on track.EDF welcomed the news but did not say if it put the project back on track.
Earlier this month, EDF admitted the Hinkley project in Somerset, which was intended to allow the plant to generate power by 2023, would be delayed.Earlier this month, EDF admitted the Hinkley project in Somerset, which was intended to allow the plant to generate power by 2023, would be delayed.
In February, the French firm announced that it had pushed back its decision on whether to invest in the plant.In February, the French firm announced that it had pushed back its decision on whether to invest in the plant.
The £24.5bn power station would be Britain's first new nuclear power plant for 20 years and is expected to provide power for about 60 years.The £24.5bn power station would be Britain's first new nuclear power plant for 20 years and is expected to provide power for about 60 years.
Mr Osborne said: "Britain was the home to the very first civil nuclear power stations in the world and I am determined that we now lead the way again. Speaking in Beijing at a joint press conference with China's Vice Premier Ma Kai, Mr Osborne said: "We want the UK to be China's best partner in the West. [This guarantee] paves the way for Chinese investment in UK nuclear [to help provide] secure, reliable, low carbon electricity for decades to come."
"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." He also announced a new £50m joint research centre for nuclear energy.
AnalysisAnalysis
By Robert Peston, BBC economics editorBy Robert Peston, BBC economics editor
What is most striking about George Osborne's Chinese tour is he is doubling his political and economic bet on the world's number two economy at a time when that economy is looking its most fragile for 30 years.What is most striking about George Osborne's Chinese tour is he is doubling his political and economic bet on the world's number two economy at a time when that economy is looking its most fragile for 30 years.
Today's manifestation of the China bet is confirmation of a long-trailed loan guarantee - initially worth £2bn but likely to rise substantially - to bind in Chinese and French nuclear giants to their promised massive £24.5bn investment in the Hinckley Point C new nuclear plant.Today's manifestation of the China bet is confirmation of a long-trailed loan guarantee - initially worth £2bn but likely to rise substantially - to bind in Chinese and French nuclear giants to their promised massive £24.5bn investment in the Hinckley Point C new nuclear plant.
This is certainly long-term strategic planning for more power security by Osborne and the government (well they would say). With oil fluctuating at between $40 and $50 a barrel, Hinckley's prospective electricity looks scarily expensive.This is certainly long-term strategic planning for more power security by Osborne and the government (well they would say). With oil fluctuating at between $40 and $50 a barrel, Hinckley's prospective electricity looks scarily expensive.
And there is a paradox about how pricey the nuclear megawatts look right now - because one of the big causes of the oil price collapse is the Chinese slowdown that has savaged demand for energy.And there is a paradox about how pricey the nuclear megawatts look right now - because one of the big causes of the oil price collapse is the Chinese slowdown that has savaged demand for energy.
Read more from RobertRead more from Robert
Mr Osborne said Chinese companies would receive a substantial stake in the project, with the UK government acting as guarantor for the investment.Mr Osborne said Chinese companies would receive a substantial stake in the project, with the UK government acting as guarantor for the investment.
The guarantee will be provided by the government's Infrastructure UK Scheme, which provides finance for projects that have had difficulties raising money from private investors.The guarantee will be provided by the government's Infrastructure UK Scheme, which provides finance for projects that have had difficulties raising money from private investors.
Energy Secretary Amber Rudd told the BBC that nuclear power played in important part in Britain's energy security.
"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.
EDF has struggled to find co-investors for Hinkley, which the government has said will provide up to 7% of Britain's electricity needs from 2023.EDF has struggled to find co-investors for Hinkley, which the government has said will provide up to 7% of Britain's electricity needs from 2023.
EDF, which will continue to control the venture, has agreed to provide electricity from Hinkley at a guaranteed minimum price of £89.50 per MW hour for 35 years.EDF, which will continue to control the venture, has agreed to provide electricity from Hinkley at a guaranteed minimum price of £89.50 per MW hour for 35 years.
Ms Rudd rejected criticisms that this was too expensive, saying nuclear power was "reasonably priced" compared with other low carbon sources of power.
She also told the Financial Times she wanted Beijing to take the lead in developing new nuclear plants in Britain.
She said China was expected to lead the construction of a Beijing-designed nuclear station at Bradwell in Essex.
'Rip-off''Rip-off'
Vincent de Rivaz, chief executive of EDF Energy, said the chancellor's announcement was "further progress towards a final investment decision" on the plant.Vincent de Rivaz, chief executive of EDF Energy, said the chancellor's announcement was "further progress towards a final investment decision" on the plant.
He said: "The chancellor's approval of the infrastructure guarantee is a clear sign of the government's commitment to Hinkley Point C. The government's determination to bring about a renewal of infrastructure and to attract inward investment to the UK are demonstrated by this good news.He said: "The chancellor's approval of the infrastructure guarantee is a clear sign of the government's commitment to Hinkley Point C. The government's determination to bring about a renewal of infrastructure and to attract inward investment to the UK are demonstrated by this good news.
But Greenpeace's chief scientist Dr Doug Parr described the £2bn guarantee from George Osborne as "signing up the country for the ultimate rip-off deal".But Greenpeace's chief scientist Dr Doug Parr described the £2bn guarantee from George Osborne as "signing up the country for the ultimate rip-off deal".
He added: "Instead of locking two generations of UK consumers into paying billions to foreign state-owned firms, Osborne should invest in the flexible, smart, and truly clean energy system that can power a 21st Century Britain without leaving a pile of radioactive waste as legacy."He added: "Instead of locking two generations of UK consumers into paying billions to foreign state-owned firms, Osborne should invest in the flexible, smart, and truly clean energy system that can power a 21st Century Britain without leaving a pile of radioactive waste as legacy."
Other critics have raised concerns about the design of the new reactor, which will use new so-called EPR technology. Similar reactors being built in France and Finland are both late and way over budget.Other critics have raised concerns about the design of the new reactor, which will use new so-called EPR technology. Similar reactors being built in France and Finland are both late and way over budget.
Energy Secretary Amber Rudd said the government would continue to work with EDF to finalise the Hinkley deal.
Ms Rudd also told the Financial Times she wanted Beijing to take the lead in developing new nuclear plants in Britain.
She said China was expected to lead the construction of a Beijing-designed nuclear station at Bradwell in Essex.
The union Unite welcomed the government's commitment to non-carbon nuclear power, but it said it should not allow China to build a plant in the UK, describing its nuclear technology as "unproven".The union Unite welcomed the government's commitment to non-carbon nuclear power, but it said it should not allow China to build a plant in the UK, describing its nuclear technology as "unproven".