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Hinkley Point: What is it and why is it important? Hinkley Point: What is it and why is it important?
(about 11 hours later)
Investment in the UK's first new nuclear plant in decades, Hinkley Point in Somerset, is set to get final approval later on Thursday.Investment in the UK's first new nuclear plant in decades, Hinkley Point in Somerset, is set to get final approval later on Thursday.
French utility EDF, which is financing most of the £18bn project, is holding a board meeting at which it is expected to approve the investment.French utility EDF, which is financing most of the £18bn project, is holding a board meeting at which it is expected to approve the investment.
The new plant will be known as Hinkley Point C and will be built next to two existing facilities, Hinkley Point A and B. But how did the project get to this point and what is at stake here?The new plant will be known as Hinkley Point C and will be built next to two existing facilities, Hinkley Point A and B. But how did the project get to this point and what is at stake here?
Why is Hinkley Point C being built?Why is Hinkley Point C being built?
Companies and governments want Hinkley Point C (HPC) to be built.Companies and governments want Hinkley Point C (HPC) to be built.
For the UK, it will deliver 7% of our electricity when most other nuclear power stations will have closed down.For the UK, it will deliver 7% of our electricity when most other nuclear power stations will have closed down.
The low-carbon electricity will help towards our climate goals. The huge project will provide an economic stimulus. And the funding arrangements mean the cost will not end up on the government's books.The low-carbon electricity will help towards our climate goals. The huge project will provide an economic stimulus. And the funding arrangements mean the cost will not end up on the government's books.
The French want it built because it furthers their international nuclear ambitions. Despite setbacks in projects in Finland and Flamanville in northern France, Hinkley provides a showcase to export their reactor technology around the world.The French want it built because it furthers their international nuclear ambitions. Despite setbacks in projects in Finland and Flamanville in northern France, Hinkley provides a showcase to export their reactor technology around the world.
The Chinese, via the CGN group, have committed to one-third of the £18bn cost, in order to get a foothold in Western Europe. The Hinkley deal also involves the Chinese taking a stake in a new project at Sizewell and the possibility of building their own reactors at Bradwell in Essex.The Chinese, via the CGN group, have committed to one-third of the £18bn cost, in order to get a foothold in Western Europe. The Hinkley deal also involves the Chinese taking a stake in a new project at Sizewell and the possibility of building their own reactors at Bradwell in Essex.
How big is the project and what will it cost?How big is the project and what will it cost?
Hinkley Point C (HPC) will be the biggest construction site in Europe, according to EDF.Hinkley Point C (HPC) will be the biggest construction site in Europe, according to EDF.
The construction will provide 25,000 jobs. At its peak, 5,600 people will work on site. The finished power plant will employ 900 people.The construction will provide 25,000 jobs. At its peak, 5,600 people will work on site. The finished power plant will employ 900 people.
The upfront cost for EDF and its partner over the coming years will be £18bn.The upfront cost for EDF and its partner over the coming years will be £18bn.
But in return, EDF will receive a guaranteed price for Hinkley's electricity for 35 years. A complex subsidy arrangement will see consumers pay billions.But in return, EDF will receive a guaranteed price for Hinkley's electricity for 35 years. A complex subsidy arrangement will see consumers pay billions.
EDF's expected return on its investment is expected to be between 9% and 10%.EDF's expected return on its investment is expected to be between 9% and 10%.
What will it mean for consumers?
The government insists that consumers will pay about £10 a year for HPC.
Despite requests, it has not provided any analysis to justify that figure, but it is expected to publish a value-for-money assessment of the project on Friday.
EDF's contract with the government guarantees the firm a "strike price" of £92.5 per MWH for the electricity that HPC generates. If the wholesale price of power is lower than this, consumers make up the difference.
But the government now expects future wholesale electricity prices to be lower than it forecast when it agreed the strike price in 2013.
The National Audit Office says that as a result, the expected top-up payment by consumers has increased from £6.1bn to £29.7bn.
Why is the UK keen on new nuclear?Why is the UK keen on new nuclear?
Ever since Tony Blair committed the UK to new nuclear in 2006, successive governments have argued that new nuclear is necessary as part of our generation mix.Ever since Tony Blair committed the UK to new nuclear in 2006, successive governments have argued that new nuclear is necessary as part of our generation mix.
Having new nuclear - it is argued - makes the UK less reliant on imported energy.Having new nuclear - it is argued - makes the UK less reliant on imported energy.
Nuclear also delivers base load electricity - that is, the amount of power that is needed to satisfy minimum demand - because it is always available. That's important as more intermittent renewables - such as wind and solar - come on to the grid.Nuclear also delivers base load electricity - that is, the amount of power that is needed to satisfy minimum demand - because it is always available. That's important as more intermittent renewables - such as wind and solar - come on to the grid.
Who is involved in the project?Who is involved in the project?
French energy giant EDF is leading the project. It's 85% owned by the French state.French energy giant EDF is leading the project. It's 85% owned by the French state.
French nuclear firm Areva, which is also majority state-owned, is supplying the EPR reactor technology that will be used at HPC.French nuclear firm Areva, which is also majority state-owned, is supplying the EPR reactor technology that will be used at HPC.
But EDF is now in effect buying the reactor from itself. Following years of losses, Areva's reactor unit is being merged with EDF as part of a rescue plan orchestrated by the French government.But EDF is now in effect buying the reactor from itself. Following years of losses, Areva's reactor unit is being merged with EDF as part of a rescue plan orchestrated by the French government.
China's CGN has a 33.5% stake in HPC and will have to fund a third of the £18bn cost.China's CGN has a 33.5% stake in HPC and will have to fund a third of the £18bn cost.
But 60% of the construction value will flow to UK firms.But 60% of the construction value will flow to UK firms.
What will it mean for consumers?
The government insists that consumers will pay about £10 a year for HPC.
Despite requests, it has not provided any analysis to justify that figure, but it is expected to publish a value-for-money assessment of the project on Friday.
EDF's contract with the government guarantees the firm a "strike price" of £92.5 per MWH for the electricity that HPC generates. If the wholesale price of power is lower than this, consumers make up the difference.
But the government now expects future wholesale electricity prices to be lower than it forecast when it agreed the strike price in 2013.
The National Audit Office says that as a result, the expected top-up payment by consumers has increased from £6.1bn to £29.7bn.
Why has it taken so long?Why has it taken so long?
EDF's UK boss said that he expected Britons to cook their Chistmas turkeys with power from HPC by 2017.EDF's UK boss said that he expected Britons to cook their Chistmas turkeys with power from HPC by 2017.
But the project has been hit by a series of setbacks and delays.But the project has been hit by a series of setbacks and delays.
Concerns have grown over Areva's EPR reactor, the type to be used at Hinkley. It's technically complex and has proved difficult to construct: EDF's Flamanville project in Northern France is three times over budget and years behind schedule.Concerns have grown over Areva's EPR reactor, the type to be used at Hinkley. It's technically complex and has proved difficult to construct: EDF's Flamanville project in Northern France is three times over budget and years behind schedule.
As the cost of Hinkley escalated, EDF had to find a partner to share the financial burden.As the cost of Hinkley escalated, EDF had to find a partner to share the financial burden.
Falling power prices then hit EDF's revenues. Its finances were further shaken by mounting liabilities, due to the roll-out of smart meters and the upgrading of France's nuclear power capability.Falling power prices then hit EDF's revenues. Its finances were further shaken by mounting liabilities, due to the roll-out of smart meters and the upgrading of France's nuclear power capability.
The deepening financial crisis led EDF's finance chief, Thomas Piquemal, to resign earlier this year. Opposition from French trade unions, which want HPC delayed, also forced the company to conduct a lengthy consultation with its works council to avoid a legal challenge.The deepening financial crisis led EDF's finance chief, Thomas Piquemal, to resign earlier this year. Opposition from French trade unions, which want HPC delayed, also forced the company to conduct a lengthy consultation with its works council to avoid a legal challenge.
But earlier this week, shareholders agreed a French government-backed refinancing plan that has paved the way for this final investment decision.But earlier this week, shareholders agreed a French government-backed refinancing plan that has paved the way for this final investment decision.