Chinese nuclear investment welcomed in UK

22 October 2015

Yesterday's announcement that China and the UK have completed a financial and commercial agreement that will see a final investment decision on EDF Energy's Hinkley Point C project by the end of the year has been widely welcomed.

Justine Greening, UK Secretary of State for International Development and Minister Gao Hucheng sign trade and investment agreements, including that for Hinkley Point C, witnessed by Cameron and Xi (Image: number10gov)

Under a deal agreed during the second day of a state visit by Chinese president Xi Jinping to the UK, China General Nuclear will take a one-third stake in EDF Energy's £18 billion ($28 billion) project to construct the Hinkley Point C plant in Somerset. In addition, the two companies will develop projects to build new plants at Sizewell in Suffolk and Bradwell in Essex, the latter using Chinese reactor technology.

In a press conference yesterday, British Prime Minister David Cameron said, "We are signing an historic deal to build the Hinkley nuclear power station, providing reliable, affordable energy for nearly six million homes and creating more than 25,000 jobs, all while working together to build a low-carbon future."

China's President Xi added, "This is a flagship project of cooperation between our countries in recent years, and it will lead to more practical cooperation of this kind."

The agreement was welcomed by UK energy secretary Amber Rudd, who said: "The UK is open for business and this is a good deal for everyone." She added that the new plant will provide low-carbon electricity for around 60 years to twice as many homes as there are in the whole of London, "and consumers won't pay a penny until the plant is up and running".

EDF Energy CEO Vincent de Rivaz noted, "Nuclear power will save customers money compared with other energy options and provide a huge boost to British industrial strength, jobs and skills both in Britain and abroad. Today's announcements are also good news in the fight against climate change."

Good for business

The UK's business community welcomed the announcement that China will invest in the country's nuclear industry.

Simon Walker, director general of the Institute of Directors, said: "Companies around the world are hungry to invest in Britain, and can bring the skills and capital needed to deliver major infrastructure like new power plants. We welcome investment in nuclear energy whether it comes from China, France, Japan, South Korea or anywhere else."

He added, "For the three-quarters of businesses that want nuclear to account for a larger proportion of our energy mix [according to a survey conducted by the institute earlier this year], the next generation of nuclear power stations cannot come online soon enough."

Tony Ward, head of power and utilities at consultancy firm Ernst & Young, said: "The market and regulatory structures to enable new nuclear build in the UK have been in place for some time, and a number of nuclear projects, not just Hinkley Point, are being developed to a stage of readiness. This first new reactor project can now move beyond the extensive, but necessary, detailed debate about its financing structure to focus on its delivery."

Other new-build contenders

The announcement clearing the progress of the Hinkley Point C project to a final investment decision was welcomed by other companies planning to construct new nuclear power plants in the UK.

Horizon Nuclear Power COO Alan Raymant said it marks a major step forward for nuclear new build in the UK and that he "looked forward to seeing EDF progress their important project" at Hinkley. "Nuclear power has a vital role to play in helping meet the country's energy needs and environmental goals and this sends a firm signal that new build is moving ahead in the UK," Raymant said.

Horizon plans to build two Hitachi-GE Advanced Boiling Water Reactor units at the Wylfa Newydd site on the island of Anglesey in north Wales. Raymant said, "We look forward to stepping up our discussion with the UK government to build momentum in developing the commercial and financing arrangements critical to the successful delivery of Wylfa Newydd."

Meanwhile, NuGen CEO Tom Samson said: "It shows confidence in the UK's approach to developing new nuclear build, and sends a positive message to future investors." NuGen plans to build three Westinghouse AP1000 reactors at Moorside, near the Sellafield site in Cumbria.

Investment model

However, Kevon Coyne, national officer for energy at the Unite union, questioned the financing arrangements for the Hinkley Point C project. He said, "Although Hinkley Point has successfully raised the finance, this has taken a long time, so we need to ask, as a country, whether this investment model is the best and most cost-effective way of financing much needed investment in future UK infrastructure projects."

Coyne added, "It is clear that the private sector struggles to provide the necessary money for these large-scale schemes. The case for greater government involvement in terms of long-term finance in such projects becomes clearer by the day. Hinkley Point is being built and financed by two non-UK entities."

In a statement, the World Nuclear Association said the mechanisms that are enabling Hinkley Point C and other low-carbon projects in the UK are "one way of addressing weakness in deregulated markets". It added, "Currently, deregulated markets fail to correctly value longer-term benefits such as carbon avoidance, price certainty and reliability of supply."

Researched and written
by World Nuclear News

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