Despite recent rumours that the UK government has been looking for an exit from the controversial Hinkley Point C nuclear power project, the newly-created Department for Business, Energy and Industrial Strategy (BEIS) has now given it the green light.
The post-Brexit government had previously tabled its decision on Hinkley pending a review of its terms.
Today, after “a comprehensive review” which resulted in revisions to its initial agreement with France’s EDF, which will build the power plant, BEIS said the £18bn ($24bn) project would proceed. However, the department also said it plans to establish a new legal framework for future foreign investment in the UK’s critical infrastructure, including nuclear power, which will come into effect post-Hinkley.
The move comes in response to criticism of the project for its ballooning costs as well as national security concerns. Two-thirds of the project is to be funded by EDF, with China contributing £6bn.
BEIS said its revised agreement-in-principle with EDF, which is still to be confirmed, is aimed at preventing the sale of EDF’s majority stake in the project without the government’s agreement until after the construction work is completed. Once the plant is online, the government will be able to intervene in any sale of EDF’s stake.
The guaranteed power price of £92.50/MWh has not been changed, although concerns have been raised because it exceeds the market rate. A study commissioned by the Financial Times found that EDF and China General Nuclear Corporation (CGN) stand to make as much as £100bn in revenues from the project over 35 years, with one analyst likening the plant to a cash machine for the Sino-French partnership.
Under the planned legal framework for future foreign investment in UK critical infrastructure, BEIS said the government “will take a special share” in all future nuclear new-build projects, and nuclear project developers and operators will be required to notify the Office for Nuclear Regulation (ONR) of any planned change in ownership or part-ownership in order to ensure that significant stakes “are not sold without the government’s knowledge or consent”.
In addition, the government’s overall policy on control of critical infrastructure will be reviewed, with the aim of “reforms” that will “ensure that the full implications of foreign ownership are scrutinized for the purposes of national security”. A national security requirement, which aims to facilitate “continuing government approval of the ownership and control of critical infrastructure”, will be established.
Greg Clark, Secretary of State for BEIS, said: “The government is committed to ensuring the country has a secure low carbon energy supply. Hinkley Point C will be a critical part of that, and will inaugurate a new era of UK nuclear power – building on Britain’s strong nuclear legacy.
“Hinkley Point C will provide 7 per cent of Britain’s electricity needs for 60 years. UK-based businesses will benefit from more than 60 per cent of the £18 billion value of the project, and 26,000 jobs and apprenticeships will be created.”
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