Britain gave the go-ahead on Thursday for a $24 billion nuclear power plant, ending weeks of uncertainty that strained ties with China and France but also signalling a more cautious approach to foreign investment in critical infrastructure projects.
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When the Hinkley deal was agreed by David Cameron past year, the agreement concerned only Hinkley Point but said the Government would look favourably on a Chinese-built reactor at Bradwell.
Financiers for the project include China and France – France’s EDF is funding two-thirds of the project, while China will front the remaining £6bn.
The Government’s agreement with EDF means it can prevent the sale of the French firm’s controlling stake before completion of construction.
Last year, China General Nuclear Power (CGN) agreed to acquire 33.5% stake in the project by investing €6bn through its new company General Nuclear International (GNI). The largest change, though, is simply a condition that will allow the government to block the French state-owned utility company EDF, which will have a third share in the project, if it chooses to sell its stake during construction.
This follows national security concerns over Chinese involvement in the project that are understood to have prompted Theresa May to put the brakes on the deal at the beginning of the summer. That will prompt some to ask what the hiatus since July’s surprise review has really achieved.
But Greg Clark, the Business Secretary, told MPs the government had struck a “new agreement”, which involved imposing “significant new safeguards” for future foreign investment in critical infrastructure. “This will ensure that significant stakes can not be sold without the Government’s knowledge or consent”.
Full implications of foreign ownership will be scrutinised for the purposes of national security to bring the UK’s policy framework on par with other major economies.
Hinkley unleashes a long overdue new wave of investment in nuclear engineering in Britain, creating 26,000 jobs and apprenticeships and providing a huge boost to the British economy, he said, adding that the electricity generated will be reliable and low carbon, and so completely compatible with the country’s climate change obligations.
“As we said some time ago, it was right that we took our time to look at all the component parts of this deal”.
Earlier Thursday, the British government issued a statement approving the project, after it halted it for almost two months.
The rival Horizon consortium, backed by Hitachi of Japan, is committed to building two new nuclear plants at Wylfa on Anglesey and at Oldbury, South Gloucestershire, based on tried and tested reactor technology much more cheaply than Hinkley Point C.
The British government agrees that it will pay £92.50 ($122.40, 108.80 euros) per megawatt-hour for electricity produced at the site – around double the market rate at the time. Shadow energy minister, Barry Gardiner said it was “too high a price” and it should have been renegotiated.
But critics said the project would raise household bills.
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“This project will clearly require a vast amount of support and it remains to be seen whether this deal is able to offer value for money”.
