The Chancellor announced the new government guarantee, provided by Infrastructure United Kingdom , for the new nuclear power station in Somerset on a five day tour of China.
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Making the announcement during a trade mission to China, Mr Osborne said the deal would allow French energy firm EDF to make the final investment decision.
Further investment is also potentially available in the longer-term.
It is also expected to open the door to unprecedented collaboration in the United Kingdom and China on the construction of new nuclear power stations.
The government is hugely keen to push through Hinkley Point and other new nuclear plants across the United Kingdom , as part of plans to wean the United Kingdom off dependence on foreign energy supplies and meet a growing shortfall from coal and nuclear plants reaching the end of their life cycles over the next decade.
“Nuclear power is cost competitive with other low-carbon technology and is a crucial part of our energy mix, along with new sources of power such as shale gas”, said Osborne.
EDF Energy chief executive Vincent de Rivaz said: “The Chancellor’s approval of the infrastructure guarantee is a clear sign of the Government’s commitment to Hinkley Point C”.
The deal now clears the way for a final investment decision by EDF, which is expected within the next few weeks.
In July 2015 EDF allocated contracts worth billions of pounds to companies to create a supply chain for the facility.
The construction of the first new nuclear power plant in the United Kingdom for a generation moved a step closer today as George Osborne announced fresh investment in the £24.5 billion project.
Under the deal, Hinkley Point’s developers will pay Infrastructure United Kingdom an annual fee of 2.95 per cent of the value of the loan – about £59 million – in what is effectively an insurance premium in return for the guarantee.
Without such a guarantee, it is thought EDF and partners would struggle to secure the necessary financing for the project. This underwriting of the financing of Hinkley Point C is welcome.
The Austrian government has filed a legal complaint to the European Court of Justice against state subsidies for the Hinkley Point nuclear plant, on the grounds they distort the market.
Greenpeace United Kingdom chief scientist Dr Doug Parr said: “This announcement is a PR smokescreen to give the impression that this project is moving forward when it’s actually bogged down in a swamp of troubles”.
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Seen as a major boost to the nuclear industry four years after the disaster at Japan’s Fukushima plant, some environmentalists see Hinkley Point as an unnecessary support for nuclear energy just as renewable energy technologies begin to take hold.
