The Government has given the green light to the first £2bn worth of guarantees for the Hinkley Point C nuclear power plant.
Announcing the deal while on a tour of China, Chancellor George Osborne said he hoped the guarantee would pave the way for a final investment decision later this year by French company EDF, which is being supported by China General Nuclear Corporation and China National Nuclear Corporation.
The new reactor facility is expected to supply 7 per cent of the country's electricity needs and create 25,000 jobs across the UK, according to the Government, but the project is already behind schedule after EDF Energy announced earlier this month that construction had been delayed and the Somerset facility will not start generating power in 2023 as planned.
Despite this, the Chancellor reaffirmed the country's commitment to building the UK's first new nuclear plant in 20 years and made it clear that further sums may be made available in the longer term.
“Britain was the home to the very first civil nuclear power stations in the world and I am determined that we now lead the way again," he said.
"Nuclear power is cost competitive with other low carbon technology and is a crucial part of our energy mix, along with new sources of power such as shale gas. So 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."
EDF's chief executive Vincent de Rivaz hailed the announcement of the guarantee "as a clear sign of the Government's commitment to Hinkley Point C".
There are hopes that a final decision may be made in time for President Li Xinping's state visit to Britain next month and the Chancellor said he hoped a successful conclusion to the Hinkley Point deal would open the door to "unprecedented" UK-Chinese collaboration on power station construction as well as greater Chinese involvement in other major UK infrastructure projects.
He has vowed to use his five-day visit to China, including the UK-China Economic and Financial Dialogue he is co-chairing with Chinese vice premier Ma Kai in Beijing, to show that the UK is the east Asian giant's "best partner in the West". Talks are also likely to focus on the potential for further Chinese investment in projects like power stations and high-speed rail links.
CNNC has already expressed an interest in taking over the decommissioned nuclear power station in Bradwell, Essex. Energy Secretary Amber Rudd, who is part of a Osborne's delegation in China, said China was expected to lead the construction of the Bradwell plant and would "definitely be part" of building Britain's next generation of nuclear power stations.
The Energy Secretary told the Financial Times: "They very much want to have their design up and running in the UK. That's because we have such tough standards of regulation everyone can have confidence they are safe and show that they have a great operation to take elsewhere."
The GMB union welcomed the financial guarantee for Hinkley Point, but warned it should not be linked to a green light for the use of Chinese nuclear technology at Bradwell.
GMB national secretary for energy Brian Strutton said: "Chinese nuclear technology is unproven and no UK government should even consider allowing it to be used in a new nuclear power station 60 miles from London. We have the technology and funding in the UK and MPs must insist that the UK Government goes ahead with that."