21 Oct (NucNet): EDF Group and the UK government have reached an agreement on the key commercial terms for an investment contract that paves the way for the construction of the first new nuclear power station in the UK in a generation.
The key terms for the construction of two new EPR units at Hinkley Point C in Somerset include a “strike price” of 89.50 pounds (about 144 US dollars, 105 euros) per megawatt-hour, which will increase in line with inflation, the government said.
EDF Group has also announced today the intent of two Chinese companies, China General Nuclear Corporation (CGN) and China National Nuclear Corporation (CNNC), to invest in Hinkley Point C as minority shareholders.
The strike price has been the subject of negotiations between EDF and the government that began last year. It is the guaranteed price at which EDF will be able to sell the electricity it generates at Hinkley Point C.
The initial GBP 89.50 strike price includes an upfront reduction of GBP 3/MWh based on the assumption that EDF will also go ahead with a new nuclear plant at Sizewell C and be able to share the “first of a kind” costs across the Hinkley Point C and Sizewell C sites.
If EDF does not go ahead with Sizewell C, the strike price for Hinkley Point C would be GBP 92.50/MWh, the government said.
The strike price is about double the current wholesale price of electricity. It will last for 35 years, the government said.
EDF said the agreement is “fair and balanced” for consumers and investors. If wholesale prices rise above the agreed strike price, consumers will not pay extra. If they fall below this price, the generator will receive a top-up payment. “Customers pay nothing until the power station is operational,” EDF said.
As part of the agreement, EDF will be required to start putting money into a fund from the first day of generation to pay for decommissioning and waste management costs associated with the plant.
Energy and climate change secretary Edward Davey said: “This is an excellent deal for Britain and British consumers. For the first time, a nuclear power station in this country will be built without money from the British taxpayer.”
