21 Oct (NucNet): French energy company EDF and China General Nuclear Power Corporation (CGN) are today signing a strategic investment agreement for new nuclear reactors at Hinkley, Sizewell and Bradwell in the UK, with construction at Hinkley – the first nuclear plant to be built in the UK in a generation – expected to begin “within weeks”.
The agreement is due to be signed in the presence of the Chinese President, Xi Jinping, and British Prime Minister, David Cameron, in London.
EDF will be majority shareholder in the two-unit Hinkley Point C station, in Somerset, and also in Sizewell, Suffolk. China will lead on Bradwell, in Essex, owning 66.5 percent of the project.
The agreement, confirmed this afternoon by Mr Cameron, who called it “an historic deal”, proposes that the Hinkley Point C station will begin providing energy by 2025. It will be the UK’s first new nuclear station since Sizewell B, which began commercial operation 20 years ago, in September 1995.
The two planned Areva 1,600-megawatt EPR reactors at Hinkley will supply seven percent of the UK’s electricity. EDF energy said the Hinkley project is “well advanced”. It has achieved planning consent, design approval for the EPR reactor and a nuclear site licence.
The company said total construction costs to first operation are forecast to be £18bn (€24bn, $27bn), which includes inflation. The construction costs have remained stable in real terms since they were announced in October 2013, the company said.
At Bradwell CGN plans to use its own reactor design, making it the first Western showcase for China’s indigenous nuclear technology.
No timeline for the Sizewell and Bradwell projects has been provided. The final investment decision for Hinkley, which should largely be a formality, will now be taken in the next few weeks.
CGN will make its investment in the UK through its new company called General Nuclear International (GNI).
EDF Energy said conditions to allow the Hinkley Point C project to go ahead are in place, including all the agreements between EDF and the UK government being in a final agreed form, as are the contracts with the key suppliers.
The government said 25,000 jobs will be created by Hinkley Point C and enough energy to power six million homes.
The government agreed in 2013 to proceed with Hinkley Point C and to provide a minimum guaranteed financial return – a “strike price” – of £92.50/MWh for electricity produced over 35 years at the station. The return would be £89.50 if EDF goes ahead with another new reactor in Sizewell, reflecting the fact that EDF’s costs will be lower per reactor if it builds two of them.
If the market price of electricity falls below this level, the government will make sure EDF receives the difference between the two prices.
The wholesale price of electricity at the moment is about £45/MWh. If the wholesale price remains at this level, then EDF will receive an additional £47.50/MWh. In practice, this money will not come from taxpayers (that would count as a subsidy), but from consumers of electricity.
The strike price works the other way as well – EDF has to refund the difference if the price of electricity is above £92.50/MWh. For example, if the wholesale price is £110/MWh, then it has to refund £18.50/MWh. Again, this money goes back to bill payers, not to the government.
EDF Energy chief executive officer Vincent de Rivaz said the benefits of Chinese investment are not just economic. He said the UK will also profit from Chinese experience, earned through developing similar projects in China.
He said at Taishan, a few hours west of Hong Kong, CGN, the Chinese nuclear company, and EDF are building two EPR reactors similar in design to those planned for Hinkley Point and Sizewell. “Chinese expertise is being gained by building and operating new nuclear power stations on a larger scale than anywhere else in the world,” he said.