Chancellor George Osborne has announced that the UK will guarantee a £2bn deal under which China will invest in a new Hinkley Point nuclear power station near Burnham-On-Sea.
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 other nuclear plants.
EDF welcomed news of the government guarantee, but did not say if it put the project back on track.
Earlier this month, EDF admitted the Hinkley C project, which was intended to allow the plant to generate power by 2023, would be delayed.
In February, the firm announced that it had pushed back its decision on whether to invest in the plant.
It cannot afford the estimated £24.5bn cost of the plant on its own, so has been looking for financial partners to invest, particularly in China. This has proved difficult, which is why the government has had to step in to guarantee part of the cost.
The new power station would be Britain’s first new nuclear plant for 20 years and is expected to provide power for about 60 years.
Speaking in Beijing, 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.”
He also announced a new £50m joint research centre for nuclear energy.
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 added: “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”.
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.
