Britain approves Hinkley Point nuclear deal

Hinkley Point C nuclear power station site is seen near Bridgwater in Britain on Sept 14, 2016.
Hinkley Point C nuclear power station site is seen near Bridgwater in Britain on Sept 14, 2016. PHOTO: REUTERS

LONDON (AFP) – Britain finally gave the go-ahead on Thursday (Sept 15) for Hinkley Point, its first nuclear plant in a generation, but set conditions to address concerns over China’s role in a flagship project for Europe’s nuclear sector.

The announcement, welcomed by its French and Chinese backers, came two months after Prime Minister Theresa May caused shockwaves by ordering a review of the £18 billion (S$32 billion) deal brokered under her predecessor, David Cameron.

China has a one-third stake in the project and analysts had warned that Britain could have jeopardised relations with the world’s second-largest economy if it scrapped the deal while critics said it could give China the power to turn off the lights.

Jean-Bernard Levy, chief executive of the French state-owned power company EDF, said the move “relaunches nuclear power in Europe”.

EDF’s board had already approved its participation in the project in southwest England in July when May’s government suddenly announced it was pausing it.

“We have decided to proceed with the first new nuclear power station for a generation,” Britain’s Business Secretary Greg Clark said in a statement, while pledging fresh measures “to enhance security”.

He told parliament that the plant’s construction would create 26,000 jobs and guarantee seven percent of Britain’s electricity needs for 60 years.

It will be “a huge boost to the economy”, he said.

One of Downing Street’s prime concerns was over the security implications of allowing China to take such a large stake in a critical infrastructure project.

Beijing’s state-run China General Nuclear Corporation (CGN), the Chinese investor in Hinkley Point, was also set to take the lead in the Bradwell power station project in Essex in southeast England.

But Clark’s ministry explained the government was taking steps to ensure it could intervene to stop any sale of EDF’s stake and to give the government more control over future nuclear projects.

Olivia Gippner, a fellow in EU-China relations at the London School of Economics, said the framework was aimed at China but “by introducing a general national security test rather than focusing only on Chinese investment, this is a very diplomatic solution”.

CGN said in a statement on social network Weibo it was “delighted” at Thursday’s announcement and would now “move forward and deliver” on Hinkley Point, as well as the Bradwell plant.

 

Chinese state media also welcomed the approval, but accused Britain of suffering from “China-phobia”.

“Finally, London has made a welcoming move by giving the go-ahead order to a key nuclear power plant programme after it was suspended over some fictitious ‘national security’ concerns about Chinese investment,” the Xinhua news agency said in a signed commentary.

“Let us hope that London quits its China-phobia and works with Beijing to ensure the project’s smooth development.” CGN is set to finance £6 billion of the cost of the Hinkley Point plant, with EDF providing the remaining £12 billion.

EDF’s share price was down 1.5 per cent in afternoon trading on the Paris stock exchange following concern about how the company will fund construction.

But French Prime Minister Manuel Valls hailed the deal as “excellent news” for France’s nuclear sector and domestic employment.

May called French President Francois Hollande on Wednesday evening to tell him that the British government had approved the project, the French presidency said.

Critics have focused on an electricity price guarantee to be paid to EDF of £92.5 for every megawatt hour of power produced by Hinkley for the next 35 years, rising with inflation, despite falling energy prices.

However, professor Juan Matthews from the University of Manchester explained that future reactors were expected to produce cheaper power and that Hinkley was needed to help meet carbon emission targets.

“The strike price (the cost of electricity) for nuclear plants is generally substantially lower than those for renewable energy,” he said.

Campaigners against Hinkley Point meanwhile handed in a petition with more than 300,000 signatures to May’s Downing Street office on Thursday with environmental pressure group Greenpeace.

The Hinkley facility will not be operational until 2025 – two years later than originally planned when the deal was first unveiled.

Steve Thomas, emeritus professor of energy policy at London’s Greenwich University, said there was still “a number of major hurdles to get through before Hinkley can go ahead” including financing at EDF’s end.