UK government gives go-ahead for Hinkley Point C

15 September 2016

The UK government today announced its approval for the construction of two EPR reactors at the Hinkley Point C nuclear power plant in Somerset after reaching a new agreement in principle with EDF. However, it has imposed certain conditions for foreign investment in future British nuclear power plant projects.

Hinkley Point C CGI - 460 (EDF Energy)
An artist's impression of how Hinkley Point C could appear (Image: EDF Energy)

Hinkley Point C received a long-awaited and positive final investment decision (FID) from the EDF board on 28 July, only for the UK government to immediately postpone signing its supporting agreements. Prime Minister Theresa May said a review of the deal would be carried out before the government commits its support. Under a deal agreed with EDF Energy last October, China General Nuclear will take a 33.5% stake in the project. In addition, the two companies plan to develop projects to build new plants at Sizewell in Suffolk and Bradwell in Essex, the latter using Chinese reactor technology.

Today the government announced it has signed a revised agreement in principle with EDF for the project. While the agreed contract for difference (CfD) - the guaranteed price for electricity generated by Hinkley Point C - still stands, the government has imposed what it calls "significant new safeguards for future foreign investment in critical infrastructure".

In a statement, Greg Clark, Secretary of State for Business, Energy and Industrial Strategy (BEIS), said: "Having thoroughly reviewed the proposal for Hinkley Point C, we will introduce a series of measures to enhance security and will ensure Hinkley cannot change hands without the Government's agreement."

According to the statement from BEIS, "The government will be able to prevent the sale of EDF’s controlling stake prior to the completion of construction, without the prior notification and agreement of ministers." It noted that existing legal powers, and the new legal framework, will mean the government is able to intervene in the sale of EDF's stake once Hinkley is operational.

The new legal framework for future foreign investment in UK critical infrastructure will mean the government will take a "special share" in all future nuclear new build projects. This, it says, will ensure significant stakes cannot be sold without its knowledge or consent. Developers or operators of nuclear sites will be required to inform the Office for Nuclear Regulation (ONR) of any change of ownership or part-ownership. The government will then "advise or direct the ONR to take action to protect national security as a result of a change in ownership".

This approach, the government said, will bring the UK's policy framework for ownership and control of critical infrastructure "into line with other major economies".

The government's announcement of its approval for the Hinkley project coincided with the opening today of the World Nuclear Association's 41st Annual Symposium in London.

EDF welcomes decision

The announcement was welcomed by EDF. "The approval of this construction project for two nuclear reactors on the Hinkley Point site in Somerset in the South West of England marks the conclusion of ten years of preparation and rigorous planning." It added, "An exchange of letters between EDF and the British authorities will render the discussions that took place over the last few days, to formalise their wish to take into account the EDF's commitment to retain control of HPC project."

EDF CEO Jean-Bernard Lévy said: "The decision of the British government to approve the construction of Hinkley Point C marks the relaunch of nuclear in Europe. It demonstrates the UK's desire to lead the fight against climate change through the development of low carbon electricity."

Vincent de Rivaz, CEO of EDF Energy said: "Today's announcement is good news for British consumers, a huge boost for British industry and a major step forward in the fight against climate change." He added, "We will take the risk and responsibility to deliver Hinkley Point C and provide the UK with the reliable low carbon electricity it needs. The experience and expertise gained from restarting new nuclear build in the UK will help following projects be cheaper."

International cooperation

Agneta Rising, World Nuclear Association director general, said today's announcement is "good news for nuclear energy in the UK and Europe” and that the Hinkley Point C project “demonstrates the value of international cooperation in new nuclear build".

Hasan Murat Mercan, chair of the organising committee for the 23rd World Energy Congress, said the UK government’s decision to go ahead with Hinkley Point C is “essential but at the same time just one piece of the puzzle” for the energy sector.

"While the UK has been debating the merits of Hinkley Point C, construction has begun on around 60 reactors in 13 countries, including two in Turkey - some of which will be completed by 2017," Mercan said.

“For nuclear energy to increase its share of the generation market, simply expanding infrastructure is not enough. There needs to be the political will to foster innovation and a sympathetic policy and investment environment for this to succeed.”

Nuclear is "high on the agenda" of the Congress, which takes place next month in Istanbul, Mercan said.

Horizon and NuGeneration

Owners of two other nuclear power plant projects in the UK welcomed the news of the government's support for Hinkley.

Horizon plans to deploy the UK Advanced Boiling Water Reactor at two sites - Wylfa Newydd, which is on the Isle of Anglesey, and Oldbury-on-Severn, in South Gloucestershire. Established in 2009 and acquired by Hitachi in November 2012, Horizon aims to provide at least 5.4 GWe of new capacity, expecting the first unit at Wylfa to be operating in the first half of the 2020s.

Horizon CEO Duncan Hawthorne said: "The emphasis must now be on delivering the government's vision of a wider nuclear program in the UK and we remain focused on continuing to make strong progress with our lead Wylfa Newydd project. This includes clearing our tried and tested reactor technology for deployment in the UK, consulting across North Wales on our plans and the huge economic opportunities they will deliver, and working with Government on a deal that delivers at a fair and acceptable price for all."

NuGen, the UK joint venture between Japan's Toshiba and France's Engie, said its Moorside project remains unaffected by the outcome of the EU referendum. NuGen plans to build a nuclear power plant of up to 3.8 GWe gross capacity at the West Cumbria site using AP1000 nuclear reactor technology provided by Westinghouse Electric Company, a group company of Toshiba.

NuGen CEO Samson said: "The news is positive for the UK nuclear new build market, where developers such as NuGen are investing heavily in delivering the next generation of low carbon power for the UK. It demonstrates the viability of new nuclear investment in the UK, based on the government's Electricity Market Reform Program and is welcome evidence of the UK government's commitment to new nuclear as an essential part of the UK energy mix." He added: "Hinkley Point C is the start of the nuclear new build renaissance in the UK, of which NuGen are an integral part, and today's decision is an essential step towards strengthening the UK security of supply. New nuclear will also help the UK to meet its domestic and international commitments to a low carbon economy."

Trade associations

Tom Greatrex, chief executive of the Nuclear Industry Association said the UK's nuclear supply chain is "ready to deliver this important national infrastructure project". He added, "The positive industrial impact of this project will be enormous with contracts already in place for Welsh steel, pumps made by Scottish companies and nuclear components from across England's industrial belt. Hinkley is a truly national project which represents an array of opportunities for the supply chain and a secure foundation for the government's industrial strategy."

The Confederation of British Industry (CBI) said the government's support of Hinkley is good news for the UK's energy future as well as supporting jobs and growth across the South West of England and elsewhere in the country.

Josh Hardie, CBI deputy director-general, said: "Investors are hungry for further signs from the government that the UK is open for business. Pressing ahead with major infrastructure decisions – such as giving clarity to around the next Contracts for Difference auction and the post-2020 Levy Control Framework, and expanding runway capacity in the South East – would give a real boost to their confidence in the UK in the long-run."

Jenifer Baxter, head of energy and environment at the Institution of Mechanical Engineers, welcomed the government's decision, but said: "It is important to note that this is not the end but merely a small step at the start of securing our low carbon energy requirements for the future." She said, "It is now more important than ever to focus on attracting business and foreign investment to our nation following the Brexit vote. The Government must work with industry to ensure we have modern, reliable and secure infrastructure, be it in energy, transport or communications."

Phil Whitehurst, national officer for construction at GMB, the union for energy and construction workers, said, "Not only will the £18 billion Hinkley Point C project provide 7% of the UK's energy needs and create at least 25,000 jobs during its construction and another 900 during operation, but 65% of the project's construction value will be placed with the UK supply chain." He added, "Along with this is an agreed minimum 1000 apprenticeship and adult trainees, creating a skill training level that will put other UK projects to shame.

Researched and written
by World Nuclear News