UK approves new nuclear plant

2013-10-21 16:27
Control room of the Cooper nuclear power plant in Brownville, Neb. (Josh Funk, AP)

Control room of the Cooper nuclear power plant in Brownville, Neb. (Josh Funk, AP)

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London - Britain agreed on Monday the construction of its first nuclear plant in 20 years to a consortium of state-backed French and Chinese firms, underlining its controversial commitment to atomic power.

The govenment has signed a €18.9 deal with French energy giant EDF to build two reactors at Hinkley Point C, southwestern England.

Also involved in the contract are French group Areva - the world's leading nuclear power company - and Chinese nuclear firms CGNPC and CNNC.

Britain has placed nuclear at the heart of its low-carbon energy policy in stark contrast to Europe's biggest economy Germany, which has vowed to phase out nuclear power in the wake of Japan's 2011 Fukushima disaster.

The British deal could meanwhile potentially push domestic energy prices up even higher according to experts, and risks stoking a political row over soaring living costs in Britain.

The project is aimed at providing Britain with secure and reliable low-carbon electricity, and will create thousands of jobs.

"Today we have a deal for the first nuclear power station in a generation to be built in Britain," said Prime Minister David Cameron, who heads a Conservative-Liberal Democrat coalition government.

"This also marks the next generation of nuclear power in Britain, which has an important part to play in contributing to our future energy needs and our longer-term security of supply."

EDF Group will have a 45-50% stake, while China General Nuclear Corporation (CGN) and China National Nuclear Corporation (CNNC) will together take a 30-40% stake.

Areva will take a 10% stake in the project

Double prevailing rate

In reaction to the deal, Areva shares jumped by more than 5.0% in midday Paris trade.

The French presidency hailed the agreement as a "historic investment", after a telephone conversation between Francois Hollande and Cameron.

A statement from the Elysee Palace said that both leaders "welcomed the success of talks between EDF and British authorities on the project to build two... nuclear reactors at Hinkley Point".

The statement said that "this historic investment, which illustrates the vitality of bialterial French-British co-operation, will boost employment in the two countries" and it will "strengthen our industries and our skills in engineering, manufacturing and construction in the French sector".

The accord guarantees an agreed price for the electricity at 92.50 per megawatt hour - which is about double the prevailing market rate in Britain - for 35 years.

This price could fall to 89.50 per megawatt hour, if EDF's plans for two nuclear reactors in Sizewell, on the eastern English coast in Suffolk, get the green light.

Crucially, however, the government will pay the difference if the market price for electricity falls underneath this guaranteed level - and the money will be funded by levies on domestic energy bills.

British anti-nuclear campaigners slammed the deal and urged the government to focus on renewable sources like wind and solar power.

"Instead of subsidising nuclear energy production, the government should be investing more in safe, clean and affordable renewable energy," said Kate Hudson, general secretary of the Campaign for Nuclear Disarmament (CND).

Meltdown

Safety has been a huge concern for Japan's nuclear industry since a massive earthquake and tsunami ravaged the country's northeast coast and triggered a meltdown at the Fukushima nuclear power plant in March 2011.

Britain chas 16 nuclear reactors which provide about 20% of the country's energy needs.

At full capacity, the two new reactors will be able to produce seven percent of Britain's electricity, enough to power five million homes. A new power station plans to be operational by 2023.

In a separate development on Monday, npower, a unit of German power giant RWE, became the third major energy supplier to hike domestic prices in Britain.

In recent weeks, SSE and British Gas also raised their prices ahead of the winter, when energy demand hits a peak.

Ed Miliband, leader of the opposition Labour party, has vowed to freeze domestic energy prices for 20 months if he wins the next general election in 2015.


Read more on:    areva  |  china  |  france  |  nuclear

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