After years of talks, EDF and the Government will today (Wednesday) finally unveil an agreement to build the first UK nuclear power station in a generation.
The approval for the £25billion Hinkley Point C plant near Burnham-On-Sea will be hailed as a landmark moment in British nuclear history.
But while it will create thousands of jobs and bring business opportunities to the area, ctritics are worried about the huge sums being handed out by the Government to get the scheme off the ground.
EDF had originally wanted to find a group of outside investors to bear the risk of financing a scheme that will not begin paying any money for another decade.
It was dealt a blow when British Gas owner Centrica pulled out of its 20 per cent stake.
Even after then, EDF hoped to take a minority stake – but could now see its holding in Hinkley pushed up.
China originally agreed to take a stake between 30 per cent and 40 per cent. While EDF pushed the Chinese towards the higher figure, it’s been reported this week that China will take a 33.5 per cent stake – leaving EDF with 66.5 per cent of the project.
George Osborne, who has been the driving force behind the open doors policy to Chinese funds sloshing into Britain, is pushing for nuclear authorities to fast-track approval for its reactors designs.
The plant owners – in this case, EDF and Beijing – want to guarantee a return for their investment. But electricity prices are notoriously volatile, and can fluctuate wildly even in the space of a single day.
The Government will guarantee EDF will receive a fixed sum – £92.50 – for every unit of power (a megawatt hour) it sells.
The technical mechanism, called a ‘contract for difference’, means the company will receive that exact sum for its electricity. If the price of electricity falls to £50, the state will pay the £42.50 required to top up EDF’s income.
Similarly, if the price soars to £150, EDF must pay the Government back £57.50 out of the money it makes. But the price it can receive – called the ‘strike price’ – has been pegged to inflation.
The £92.50 is the price it will receive in 2012 money. This translates to £100.68 in today’s currency, and could be worth up to £120 or more by the time the plant begins generating power into the system in the next decade.
It will rise in line with inflation every single year until 2060, when the guarantee ends. In 2013, when the subsidy level was agreed, EDF said its nuclear technology was ‘the cheapest of all low carbon technologies’.
But Stop Hinkley spokesperson Alan Jeffery told Burnham-On-Sea.com: “Why does George Osborne want to throw good money after bad on this project. In the process, he has devastated the UK’s burgeoning renewable energy industry, threatening up to 20,000 jobs in the process. He is doing his best to kill off an innovative industry of the future in order to keep alive a technology of the past. It makes about as much sense as funding a telegram service whilst killing off the mobile phone industry.”
“Going cap in hand to a country with such a lamentable human rights and health and safety record is bad enough, but doing so to fund the biggest white elephant in history and kill off the industry which offers the UK’s best hope of tackling climate change is just insane. Surely it must only be a matter of time before this crazy scheme collapses under the weight of argument.”
