New nuclear power stations like Hinkley will be vital in the next decade for Britain’s energy security as most of the country’s existing nuclear stations are due to close before 2023. New nuclear power stations will also be key to cutting the carbon emissions from Britain’s electricity industry in the UK’s future low carbon energy mix.
Hinkley will generate a stable source of clean power to nearly 6 million homes once it is up and running, and will provide 25,000 jobs during construction. UK companies could benefit from getting more than 50% of the work, and thousands of jobs are expected to go to local people.
The State aid case included both the proposed Contract for Difference, which provides the developer with an increased price certainty for the electricity generated by the plant, and the proposed UK Guarantee for the project, which will help unlock debt finance.
Last October’s agreement in principle with EDF, the developer, remains in place, and there has been further agreement to strengthen arrangements for benefits to be shared with consumers if the project comes in under budget, or if the project’s return exceeds a certain level. This ensures that consumers won’t pay more than they have to whilst providing a reasonable return for the investors.
The Government and EDF are continuing to work together to finalise the Hinkley project, including the full terms of the Contract for Difference and the financing arrangements for the project, which includes support from the UK Guarantee. UK Guarantees are designed to facilitate the development of infrastructure that would otherwise find it difficult to obtain finance due to the current state of capital markets.
Energy and Climate Change Secretary Ed Davey said:
“This is an important next step on the road to Britain’s first new nuclear power station in a generation. While there is much work still to do before a final contract can be signed, today’s announcement is a boost to our efforts to ensure Britain has secure, affordable low carbon electricity in the 2020s.
“After a thorough, detailed and independent analysis of our proposed project with EDF, this decision shows the European Commission agrees that this is a good deal for consumers and enables us now to proceed to the next stage.”
Hinkley Point C represents the start of investment in a new fleet of nuclear power stations replacing old, polluting power plants and supporting a skilled, low-carbon future with increased energy security and resilience from a safe, reliable, home-grown source of electricity.
EDF Group and other investors will be responsible for funding the project, which will be paid for through energy bills like all other electricity supplies.
Building a new fleet of nuclear power stations could reduce household bills by around £95 in 2030. Moreover, for the first time ever, the operator of the plant will be responsible for the full costs of decommissioning and its share of the costs of waste management.