After initially postponing the final decision pending review, Prime Minister Theresa May has officially approved the £18 billion nuclear reactor to be built in Somerset, following a revised agreement with EDF.
EDF hold the majority stake in the Hinkley project, with Chinese state backed nuclear company CGN (China General Nuclear) financing a third of it. When it was first announced that the UK government would be imposing a delay on the final decision, it was suspected that caution over the level of foreign (particularly Chinese) investment was to blame, and part of the new revised agreement between EDF and the government involves various related safeguards preventing conflict of interest.
The government released a statement saying: “Following a comprehensive review of the Hinkley Point C project, and a revised agreement with EDF, the government has decided to proceed with the first new nuclear power station for a generation. However, ministers will impose a new legal framework for future foreign investment in Britain’s critical infrastructure, which will include nuclear energy and apply after Hinkley.”
The Business and Energy secretary Greg Clark played a key role in negotiating these revised terms, which include a caveat that will prevent EDF from selling of its interest in the project, either during or after construction, without first consulting and gaining the permission of the UK government.
Clark reiterated the message of the government’s official statement, saying: “Having thoroughly reviewed the proposal for Hinkley Point C, we will introduce a series of measures to enhance security and will ensure Hinkley cannot change hands without the government’s agreement. Consequently, we have decided to proceed with the first new nuclear power station for a generation.
“Britain needs to upgrade its supplies of energy, and we have always been clear that nuclear is an important part of ensuring our future low-carbon energy security.”
The official statement explained that the government would be taking a “special interest” in all new nuclear projects in the UK, ensuring that “significant stakes cannot be sold without the government’s knowledge or consent.”
The statement also alluded to generally stricter rules regarding foreign investment in UK-based projects like Hinkley in the future. It said: “There will be reforms to the government’s approach to the ownership and control of critical infrastructure to ensure that the full implications of foreign ownership are scrutinised for the purposes of national security.”
“The changes”, the statement went on, “mean that, while the UK will remain one of the most open economies in the world, the public can be confident that foreign direct investment works in the country’s best interests.”
There is the possibility that this new, tighter approach, may hinder CGN’s ability to go through with their intended plans to expand their nuclear presence in the UK by investing in the construction of further reactors at the Sizewell site in Suffolk, and the BRadwell site in Essex, though a spokesman for the company said otherwise.
They said: “We are now able to move forward and deliver much-needed nuclear capacity at Hinkley Point, Sizewell and Bradwell with our strategic partners, EDF, and provide the UK with safe, reliable and sustainable low-carbon energy.
“CGN and EDF have worked together in close cooperation for decades and this has laid a solid foundation for these three new nuclear projects. CGN looks forward to leveraging its 30 years’ experience in nuclear construction and operation and playing an important role in meeting the UK’s future energy needs.”
While EDF, CGN and Mr Clark all spoke positively about the decision as one that marks an important step forward in terms of diversifying and securing the UK’s energy supply, those who have been critical of the Hinkley project form the offset reiterated their arguments against it.
The Green Party’s Caroline Lucas wrote an article in the Guardian condemning the government’s decision to push ahead with the expensive project while, she argued, “cheaper and cleaner alternatives are being blocked”.
She criticised the government’s prior and still binding decision to offer a guaranteed strike price for the energy produced by Hinkley under the contract for difference programme, describing it as “a terrible deal”.
Critics have pointed to the fact that the price agreed (£92.50 per MW/h) is disproportionately high, given the fact that wholesale energy prices at the moment are around half that. Depending on the movement of wholesale energy prices over Hinkley’s lifetime, this agreed price could add billions to the overall cost, according to a report from the National Audit Office.