U.K. Chancellor of the Exchequer George Osborne pledged to increase cooperation with China and build new nuclear power stations in Britain, which he says are “crucial” to the country’s energy mix.
The U.K. government will provide a guarantee of 2 billion pounds ($3 billion) for building the Hinkley Point C nuclear power station in southwest England, Osborne said Monday on a trip to China. The money, which will be provided through Infrastructure U.K., may be the first tranche of a number of similar guarantees and “pave the way” for a final investment decision by Electricite de France SA, supported by China General Nuclear Corp. and China National Nuclear Corp.
“Nuclear power is cost competitive with other low carbon technology and is a crucial part of our energy mix,” Osborne said in a statement. “I am delighted to announce this guarantee for Hinkley Point today and to be in China to discuss their investments in Britain’s nuclear industry.”
Britain reached a deal with EDF in October 2013 to build the nation’s first reactor since 1995, agreeing on loan guarantees to cover construction costs and a fixed power price for 35 years. The company hasn’t yet made a final investment decision on the project, which the European Commission estimates will cost 24.5 billion pounds.
The agreement between the U.K., France and China stipulates Chinese partners will pay for Hinkley and another nuclear plant in Suffolk, according to a report Monday by the Financial Times. In return the Chinese will receive a controlling stake in Bradwell, a new plant being planned in Essex, the paper said. The U.K. government couldn’t immediately confirm the report.
China has 25 reactors under construction, 37 percent of the total under construction around the world, according to the World Nuclear Association.
“Britain was the home to the very first civil nuclear power stations in the world and I am determined that we now lead the way again,” Osborne said.
Hinkley Point C is key to U.K. plans to cut carbon emissions and maintain security of its power supply so that electricity generation doesn’t depend on intermittent sources of renewable energy such as wind farms and solar plants.
Delays and ballooning costs at EDF’s new reactor at Flamanville in France are increasing the pressure on the delayed plans for Hinkley Point, using the same technology. The startup of the unit has been pushed back to the end of 2018, 11 years after construction began, and costs have more than tripled to 10.5 billion euros ($11.7 billion), the state-run utility said Sept. 4.
Caroline Lucas, an member of U.K. Parliament for the Green Party, said the deal was too costly and raised concerns nuclear facilities wouldn’t be able to safely dispose of all their waste.
“It is truly absurd that this Government plans to plough 2 billion pounds more of taxpayers’ money into this vastly overpriced project,” Lucas said in a statement. “Instead of wasting taxpayers money on this costly white elephant the Government should urgently invest in clean, renewable alternatives that can come online far more quickly and cheaply.”
Nuclear generation in China has a levelized cost of electricity of $56.62 a megawatt hour, less than half that in France and the U.K., according to an Aug. 31 report by the International Energy Agency and the OECD Nuclear Energy Agency. Levelized cost of electricity calculations assess projects over their lifetime and include finance costs. Solar has an average levelized cost of about $200 per megawatt-hour, data from IEA shows.