George Osborne announces Chinese investment in nuclear power – The proposal to build Britain’s first new nuclear power station in twenty years has moved a step closer today as George Osborne revealed that China will be investing, and the UK government will guarantee £2billion into the project. The Chancellor, who is currently in China on a weeklong trade trip, has emphasized the importance of the East Asian country in the world economy, saying “China’s growth is still absolutely phenomenal… let’s turn towards China, let’s do more business together. We can be China’s best partner in the west, and that’s what I’m determined to achieve.” Osborne said this announcement would lead to EDF making a final decision as to whether they would be investing in the project. The French energy company had pushed back their decision earlier in the year, however, chief executive Vincent de Rivaz, responded positively saying, “the Chancellor’s approval of the infrastructure guarantee is a clear sign of the Government’s commitment to Hinkley Point C.”
The delayed and somewhat controversial nuclear power station is to be situated in Hinkley Point, Somerset, and is estimated to cost £24.5billion to complete. Once up and running – initially planned for 2023, but now likely to be delayed further – the plant will supply 7% of the UKs electricity needs. The Chancellor will also be keen to point out the amount of jobs the plant is expected to create, initally with the manufacturing and building, and then the running of the plant thereafter.
There have been many objections to this deal, not only from the expected opponents such as environmentalists. The economics of the deal have been under attack too. As part of the initial agreement, the government has guaranteed that EDF will have a selling price of £89.50 per MWh, rising with inflation, for 35 years. The current wholesale price of one MWh of electricity in the UK is £44. This will almost certainly lead to higher prices for the consumer, whilst guaranteeing profits for EDF. The government has also been accused of not allowing enough competition in the market whilst making the deal, and therefore being pushed into paying higher prices. A recent article in the Financial Times finished with a seemingly simple suggestion: “If the economics does not make sense, [the government] should consider scrapping the deal and retendering it, this time on a properly competitive basis and with more stringent criteria.” With today’s announcement, this idea might no longer be possible.
