$4.3b in state aid for UK N-plant

LONDON • The British government has said it would provide £2 billion (S$4.3 billion) in state aid for a nuclear power station planned for Hinkley Point in south-west England.

Yesterday's announcement of financial support - which was made by Mr George Osborne, the Chancellor of the Exchequer, during a visit to China - appeared to be a confidence-building measure aimed at wrapping up a deal, years in gestation, to build Britain's first nuclear plant since the mid-1990s.

"They are edging towards trying to sign a deal, but it is taking a long time," said Mr Antony Froggatt, a nuclear analyst at Chatham House, a London research organisation.

Britain said it expected EDF, the French state-controlled utility leading the project, to make a final decision later this year to go ahead with the plant. If EDF moves forward, it will be supported by two Chinese companies, China General Nuclear Corp and China National Nuclear Corp.

Mr Osborne has been courting Chinese firms to help finance the new Hinkley Point station, which will cost at least £16 billion and is already several years behind its original schedule.

"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," Mr Osborne said in a statement.

In trying to build nuclear plants, Britain is bucking the trend in the West. In the wake of the 2011 Fukushima disaster in Japan, Germany and other Western nations decided to gradually phase out nuclear power. Few plants are under construction in America and Western Europe, and two of those, in Finland and France, have encountered long delays and huge cost overruns.

Despite such problems, Britain strongly backs construction of new nuclear plants. It views nuclear energy as a low-carbon source of power generation useful for meeting its targets to reduce carbon emissions. Its nuclear power plants - which produced 19 per cent of Britain's electricity last year - are ageing and regulations will force utilities to close coal-fired plants.

The government says the new plant will create 25,000 jobs. It is expected to generate 7 per cent of Britain's power.


A version of this article appeared in the print edition of The Straits Times on September 22, 2015, with the headline '$4.3b in state aid for UK N-plant'. Print Edition | Subscribe