Hinkley Point approved following 'legal framework' agreement
Britain has finally approved the construction of the £18bn Hinkley Point C nuclear power plant, ending weeks of uncertainty after an agreement was reached giving the government final say over foreign investment decisions for the country’s critical infrastructure.
The new agreement gives the government the opportunity to veto the sale of EDF's controlling stake in the project prior to the completion of construction and will allow it to intervene in any future sales after it has been built.
The legal framework is not limited to Hinkley Point and will ensure that the government receives a ‘special share’ in all future nuclear projects built in the UK so that significant stakes cannot be sold without the government's knowledge or consent.
The deal follows a period of strained relations with China and France since the UK rejected final confirmation of the project in a last-minute about face after EDF finally agreed to fund and build it despite disagreement among its board of directors.
That decision appeared to result from hesitation on the part of new Prime Minister Theresa May who was suspicious of Chinese involvement and wanted to look at the minutiae of the project before signing on the dotted line.
China, which has a one-third stake in Hinkley Point C, was critical of the delay, saying that failure to go ahead would damage its relationship with the UK.
In a statement, May's government said it had decided to proceed with the project in south-west England after a comprehensive review.
The decision eases concerns that May, who was previously Home Secretary, was closing the door to foreign investment, particularly from China. According to a former colleague, ex-business minister Vince Cable, May had expressed concern at the ‘gung-ho’ attitude that her predecessor David Cameron took towards courting Chinese investment.
"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," Greg Clark, business minister, said in a statement.
"Consequently, we have decided to proceed with the first new nuclear power station for a generation."
Critics of the deal had expected Britain to try to renegotiate the price, which they say was set too high before oil prices fell, dragging energy costs lower.
But the statement from the government said the price had not changed for the energy which is needed to fill a supply gap as the country's coal-fired plants are set to close by 2025.
An aide to French President Francois Hollande said May had called him to say ‘she supported the launch of the Hinkley project’.
Hinkley Point C is set to provide seven per cent of Britain's electricity needs for 60 years and will create 26,000 jobs and apprenticeships.
The GMB union said it was ‘delighted’ that the project was going ahead as ‘the first of the badly needed fleet of new nuclear power stations’ in the UK to fill the country’s looming energy gap.
"This is the right decision for the country, and the government is right to ignore the begrudgers and naysayers,” said Justin Bowden, GMB National Secretary for energy.
“Having secure low-carbon electricity for the 61 days per year when there are no renewable energy sources available is crucial if we are to meet our energy needs and reduce our dependency on foreign imports of power.
“With Hinkley now confirmed, attention must rightly shift to the other new nuclear power stations - including Bradwell in Essex and Sizewell in Suffolk - which we badly need across the country.
“The solution however is not to hand over the replacement of vital UK infrastructure lock, stock and barrel to China.
“GMB strongly cautions that the funding of nuclear developments should always be kept totally separate from the regulation of the design and construction of new nuclear facilities and the transport and safeguarding of nuclear and radioactive materials. Chinese pop-up power stations are not a solution on their own."
But Chris Kimmett, commercial manager at Open Energi which specialises in dynamic energy grids, was less enthusiastic about the project.
“No matter what happens on the energy system we need fast acting distributed flexibility to keep the lights on.
“It is misguided to think that large-scale nuclear generation capacity confers security. Only yesterday we experienced a major energy crunch that saw UK electricity prices soar to record highs, following 1GW of unplanned nuclear plant shutdowns by EDF.
“Rather than guaranteeing security of supply, Hinkley’s scale provides us with an even larger single point of failure on the grid. Closing down such a giant plant as Hinkley at short notice would immediately put the security of the nation’s electricity supply at risk, and this week shows us that this scenario is not unimaginable.
“The UK is already primed to become a global leader in innovative demand-side technology and the Hinkley decision means the flexibility conferred by smart DSR tech and storage will now be more necessary than ever.
“Unlocking the demand-side opportunity is not a ‘nice to have’ for energy market reform, it is fundamental to balancing a GB grid that will be dominated by large-scale, inflexible generation plant.”
Renewables are making up an increasingly large proportion of the UK's energy mix as an alternative to nuclear. For a day last month, Scotland's demand for electricity was entirely met by wind power during a period of high winds.