French energy giant EDF said yesterday it had clinched a deal worth ￡16 billion (US$26 billion) to build Britain’s first new nuclear plant for a generation, with Chinese backing.
EDF has agreed to construct two nuclear reactors at Hinkley Point C, in southwestern England, alongside French nuclear group Areva and Chinese nuclear firms China Guangdong Nuclear Power Holding Co (CGNPC, 中國廣東核電集團) and China National Nuclear Corp (CNNC, 中國核工業集團).
The price of shares in Areva jumped by slightly more than 4 percent in initial trading in Paris in reaction to the deal.
“EDF Group and the UK Government have reached in principle an agreement on the key commercial terms for an investment contract of the planned Hinkley Point C nuclear power station,” EDF said in a statement.
The project aims to provide Britain with secure and reliable low-carbon electricity, and will create thousands of jobs, but the deal is likely to face criticism over the high price that will be paid for electricity.
“As part of our plan to help Britain succeed, after months of negotiation, today we have a deal for the first nuclear power station in a generation to be built in Britain,” British Prime Minister David Cameron said in the statement.
“This deal means ￡16 billion of investment coming into the country and the creation of 25,000 jobs,” said Cameron, who heads a Conservative Liberal Democrat coalition government.
Areva will construct the two European Pressurized Reactors (EPRs), taking a 10 percent stake in the project.
EDF Group will have a stake of between 45 percent and 50 percent, while CGNPC and CNNC will together take a stake of between 30 percent and 40 percent.
British Chancellor of the Exchequer George Osborne had paved the way for the deal last week, announcing on a visit to Beijing that Chinese firms would be allowed to invest and take majority stakes in civil nuclear projects in Britain.
Discussions are meanwhile ongoing with other interested parties over the remaining 15 percent share.
“This underlines the confidence there is in Britain and makes clear that we are very much open for business,” Cameron said.
“This also marks the next generation of nuclear power in Britain, which has an important part to play in contributing to our future energy needs and our longer-term security of supply,” he said.
The accord also agrees a guaranteed price for the energy produced by the two reactors, which had been a major sticking point in the negotiations between the firm and the government.
At full capacity, the two new reactors will be able to produce 7 percent of Britain’s electricity, enough to power 5 million homes.
If the deal is confirmed next year, the power station, in southwest England, will be operational by 2023.
“The agreement in principle reached today with the British Government significantly strengthens the industrial and energy cooperation between France and the United Kingdom,” EDF group chairman and chief executive Henri Proglio said.
“The EPR project at Hinkley Point represents a great opportunity for the French nuclear industry in a context of a renewal of competencies,” Proglio said.
“This project will deliver a boost to the economy and create job opportunities on both sides of the channel,” he added.