UK nuclear power plant gets go-ahead

 

Will the new nuclear plant mean cheaper bills? Energy Secretary Ed Davey is challenged at a news conference

The government has given the go-ahead for the UK's first new nuclear station in a generation.

France's EDF Energy will lead a consortium, which includes Chinese investors, to build the Hinkley Point C plant in Somerset.

Ministers say the deal will help take the UK towards low-carbon power and lower generating costs in future.

Critics warn guaranteeing the group a price for electricity at twice the current level will raise bills.

"For the first time, a nuclear station in this country will not have been built with money from the British taxpayer," said Secretary of State for Energy Edward Davey.

Start Quote

If the electricity price is below the strike price, then bills will probably go up. If it is above the strike price, then bills could go down.”

End Quote

The two reactors planned for Hinkley, which will provide power for about 60 years, are a key part of the coalition's drive to shift the UK away from fossil fuels towards low-carbon power.

Ministers and EDF have been in talks for more than a year about the minimum price the company will be paid for electricity produced at the site, which the government estimates will cost £16bn to build.

The two sides have now agreed the "strike price" of £92.50 for every megawatt hour of energy Hinkley C generates. This is almost twice the current wholesale cost of electricity.

This will fall to £89.50 for every megawatt hour of energy if EDF Group goes ahead with plans to develop a new nuclear power station at Sizewell in Suffolk. Doing both would allow EDF to share costs across both projects.

The wholesale cost of generating electricity in £/MWh
Cost of generating electricity £/MWh, Nuclear £92.50, Onshore wind £100, Offshore wind £155, Tidal and Wave £305, Solar £125, Biomass £105, Electricity (coal and gas generated) £56.06:

Mr Davey said the deal was "competitive" with other large-scale clean energy and gas projects.

Ed Miliband: "The prime minister... can't freeze prices now for the consumer"

"While consumers won't pay anything up front, they'll share directly in any gains made from the project coming in under budget," he added.

John Cridland, director-general of business lobby group the CBI, welcomed what he said was a "landmark deal".

"It's important to remember this investment will help mitigate the impact of increasing costs. The fact is whatever we do, energy prices are going to have to go up to replace ageing infrastructure and meet climate change targets - unless we build new nuclear as part of a diverse energy mix."

However, Dr Paul Dorfman, from the Energy Institute at University College London, said "what it equates to actually is a subsidy and the coalition said they would never subsidise nuclear".

He added: "It is essentially a subsidy of between what we calculate to be £800m to £1bn a year that the UK taxpayer and energy consumer will be putting into the deep pockets of Chinese and French corporations, which are essentially their governments."

Hinkley Point C Hinkley Point C is set to take 10 years to become fully operational. It will be made up of two nuclear reactors and will be built next to Hinkley Point A and B.
Sea wall at Hinkley Point C The land will need to be flattened and then the sea wall will be built. After this, excavation work can start to lay the foundations of the nuclear plant including two underground two-mile (3km) tunnels for the cooling water.
Turbine hall The building of the two reactors will be staggered with the first reactor expected to be operational by 2023.
Turbine hall The other aspects of the build include the turbine halls, standby power generators and a pumping station for the cooling water, interim waste storage facilities as well as a visitors' centre.
Workers' campus (artist impression) Workers' accommodation will be built across three sites, with two in Bridgwater and a third on site. Other infrastructure includes building two park and ride sites and developing Combwich Wharf.
View of Hinkley Point C with Hinkley Point A and B in the background The power station is expected to provide up to 25,000 jobs during the lifetime of the project and once built will provide about 900 full-time jobs.
China invests

Chinese companies China National Nuclear Corporation and China General Nuclear Power Corporation will be minority shareholders in the project.

The move follows Chancellor George Osborne's announcement last week that Chinese firms would be allowed to invest in civil nuclear projects in the UK.

Prime Minister David Cameron said that the new Hinkley Point plant was "an excellent deal for Britain and British consumers".

"This underlines the confidence there is in Britain and makes clear that we are very much open for business," he added.

David Cameron:"It kick-starts again the British nuclear industry"

Labour leader Ed Miliband, who has pledged to freeze energy prices for 20 months if he wins the next election, said the party supported the development of new nuclear power stations, but would scrutinise the terms of the deal to ensure it delivered value for money for consumers.

"We've got the Prime Minister who says he can fix prices 35 years ahead for the energy companies but he can't freeze prices now for the consumer. No wonder we've got a cost of living crisis in this country," he added.

The existing plant at Hinkley currently produces about 1% of the UK's total energy, but this is expected to rise to 7% once the expansion is complete in 2023.

UK map of nuclear power sites

The announcement is not legally binding and it will be 2014 before EDF makes a final investment decision on the project. The plans will also require state aid clearance from the European Commission.

But it comes as concerns about domestic energy bills move up the agenda, with SSE, British Gas and Npower, three of the UK's "big six" gas and electricity suppliers, all having announced price increases.

The government estimates that with new nuclear power - including Hinkley - the average energy bill in 2030 will be £77 lower than it would have been without the new plants.

Energy UK, the trade body for the industry, said the agreement on Hinkley was "good news".

"Building new power stations is never quick or cheap, but in the case of Hinkley development, nothing goes on the bill until 2020," it said.

About 25,000 jobs are expected to be created during construction of the power plant, as well as 900 permanent jobs during its 60-year operation.

 

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    +8

    Comment number 1608.

    After years with its head in the sand over increasing energy demand vs decommissioning nuclear generating capacity, the Government (backed into a corner) has taken the only option available to it to plug the gap. This and the "dash for gas" have left us overly dependent on foreign sources of energy and expertise.

    A sad day for UK engineering brilliance.

  • rate this
    -1

    Comment number 1606.

    Pleased with the announcement; although disappointed that it is taking so long with what is a mature and well known technology.
    If we are to move away from damaging the environment, especially climate change threats, then it will be costly.
    Now, let’s press ahead for the rest.

  • rate this
    +17

    Comment number 1430.

    As well as paying double the subsidy we the taxpayers will also be paying for the decommissioning of the plant at the end of it's life.

    Our so called 'green taxes' on current power bills is being used to pay the decommissioning costs of the existing nuclear plants which runs into billions of pounds and not for investment in renewable energy sources.

  • rate this
    0

    Comment number 826.

    A good deal for the taxpayer I wonder? £16bn and ten years at least before a single Megawatt comes out of it. The installed and connected cost of a 2MW wind turbine (average) is £2.5m. So we could have 6.500 x 2Mw turbines for £16bn and they would be adding to the grid incrementally from day one and with grid scale battery tech moving apace, Hinkley would emerge as a costly white elephant.

  • rate this
    0

    Comment number 655.

    Germany has a much more progressive government than ours. Science and engineering is at the core of the German economy with important decisions made by scientists and engineers. Phasing out nuclear fission in Germany is quite sensible. Unfortunately we are stuck with politics, history and economics graduates making decisions in the UK. No surprise the UK is going backwards.

 

Comments 5 of 11

 

More Business stories

RSS

Business Live

  1.  
    10:56: Tesco inquiry Kamal Ahmed BBC Business editor

    "The fact that the inquiry will investigate three years of accounts will concern investors as it could reveal further evidence that the problems go back further than initially thought. The FRC's arsenal if any wrong-doing is found is formidable. It can impose unlimited fines on PwC, it can demand unlimited costs and it can strike off any individual found to have behaved improperly."

     
  2.  
    10:46: Banking's reputation

    The Bank of England has urged banks to go further than "stress testing" to regain their customers' confidence. This from the latest Financial Policy Committee minutes: "Committee members also noted that recent misconduct and other operational failings had highlighted that rebuilding confidence in the banking system would require more than financial resilience... The Committee judged that strong, effective and well-informed management and governance arrangements would be essential to rebuild confidence in the banking system."

     
  3.  
    Via Twitter James Cook Scotland Correspondent, BBC News

    "Shoppers rescued from flooded Asda in Kilmarnock"

    East Ayrshire Police
     
  4.  
    10:20: Tesco inquiry

    Our business editor points out that the Financial Reporting Council only has power over its members - i.e. auditors, which in Tesco's case were PwC. However, the FRC can ask Tesco to assist in the investigation.

     
  5.  
    Via Twitter Kamal Ahmed BBC Business editor

    "FRC's inquiry will include PWC's auditing of Tesco's accounts as well as the preparation of those accounts"

     
  6.  
    Breaking News
  7.  
    09:55: Scotland's budget
    North Sea Oil

    The lead in the Financial Times is a suggestion that Scotland may have been saved from a crisis in its public finances by voting "no" in the referendum on independence. It says projections by the Office for Budget Responsibility suggest that had Scotland voted "yes", the falling oil prices would have led to its North Sea oil revenues slumping to just one-fifth of Holyrood's preferred forecasts in the country's first year of independence.

     
  8.  
    09:40: Snow-plough parents
    Skiing

    The Times highlights what it says is a new trend for well-heeled British parents: hiring private tutors to accompany them on family skiing trips. This apparently allows teenagers to cram for forthcoming exams, while still enjoying some action on the piste. The paper says it brings fresh meaning to the term "snow-plough parents" - those over-protective parents, bent on removing every obstacle in their offspring's path.

     
  9.  
    09:25: Spanish tax
    Cristina

    A judge in Spain has ordered that Princess Cristina de Borbon, the sister of the Spanish King, be tried on charges of tax fraud. It will be the first time a member of the Spanish royal family appears in the dock.

     
  10.  
    09:10: Facebook friends Russia
    Navalny

    On its front page, The Independent reports that Facebook has been accused of giving in to censorship after it apparently blocked access to a protest page on its site - under pressure from the Kremlin. A former US ambassador to Russia describes it as a "horrible precedent". According to The Daily Telegraph, Facebook has declined to comment on the suggestion that it stopped Russian users from viewing a page, rallying support for one of President Putin's most prominent opponents.

     
  11.  
    08:55: UK jobs Radio 5 live

    The employers' organisation, the CBI, says its latest survey suggests that half of its members plan to take on more staff next year. "Skills are at a premium in lots of areas," says CBI's director for employment and skills, Neil Carberry. "In fact one of the things we found in this year's survey is the biggest worry now for companies in their broadly rosy picture is whether they can get the skills they need to keep growing."

     
  12.  
    08:45: Markets update

    The main European markets are all looking rather chirpy this morning. Gains for oil firms, including Tullow Oil, Royal Dutch Shell and BP are driving the FTSE up 1% to 6,608. That's partly because Brent Crude has risen by 2% to $62.24 a barrel. In Germany, the Dax is up 0.9% to 9872, while in France, the Cac-40 is up 1.2% to 4293.

     
  13.  
    Cranking up Lada 08:28: Via Email Tony Higgins Lada owner

    "We had a Lada Niva. We bought it when we moved to a Lancashire hill farm in 1993. It was great. The early years were bad winters but the Lada coped very well. It was like a crab both on and off road, permanent 4WD. No power steering so hard work."

     
  14.  
    08:12: Pull over, Uber
    Xiaomi

    Uber may have been valued at $40bn, but one Chinese tech firm could now be worth an estimated $45bn, despite being relatively unknown outside Asia. The WSJ reports that smartphone and tablet maker Xiaomi, whose polished branding and devoted fan base is reminiscent of Apple's, has overtaken Samsung in China, but faces several challenges in expanding into India and beyond.

     
  15.  
    07:54: Cranking up Lada

    So, on to some of those Lada jokes. What do you call a Lada with a sun roof? A skip. What do you call a Lada with a sunroof and twin exhausts? A wheelbarrow. Etc. Send us your favourite Lada jokes: bizlivepage@bbc.co.uk and we will publish the best. Or if you've driven a Lada, and think they get a bad rap, let us know.

     
  16.  
    07:49: Cranking up Lada
    Lada

    The New York Times reports that the Kremlin is seeking to revive Russia's last major Soviet brand - the carmaker Lada. It has recruited Swedish-American Bo Inge Andersson, previously a vice president at General Motors. Lada, historically the butt of many jokes, still accounts for a third of all cars in Russia, and as foreign companies like Audi and Jaguar Land Rover suspend sales in the country due to the plummeting rouble, the utilitarian company could return to strength.

     
  17.  
    07:35: B&Q China
    bnq

    Kingfisher says it will flog its controlling 70% stake in B&Q China to Wumei Holdings for £140m. It opened its first B&Q in the country in 1999.

     
  18.  
    07:25: Oil blessing?

    The Guardian's leader takes a contrarian stance on falling oil prices, which have been widely welcomed by Western consumers. "Oil has dipped 40%, pessimists fear, because the world no longer expects a return to economic full pelt," it argues. "Europe, Japan and - relative to its own vigorous standards - China, have all been looking anaemic this year. Like low blood pressure after a heart attack, then, cheap oil should arguably be regarded not as a sign of rude health, but rather as a consequence of malaise."

     
  19.  
    07:12: Budget Samsung
    Samsung

    $100 for a Samsung smartphone? CNBC reports the South Korean company is entering the increasingly competitive budget handset market, in a bid to sell more phones in India, where many people still use simple phones. The new handset will run Samsung's own Tizen software.

     
  20.  
    06:58: Rates Radio 5 live

    The Bank of England's Martin Weale adds that he is optimistic about the year ahead. More money to spend from cheaper oil will help. He's on the committee that helps decide the key interest rate. Will it rise this year? He's careful not to second-guess his colleagues on that one.

     
  21.  
    06:46: Santa rally? Radio 5 live
    santa

    Will there be a so-called Santa rally this year? A rise in markets in the days around Christmas? Brenda Kelly from IG says you see one in almost nine out of every 10 years since the '80s.

     
  22.  
    06:28: Rates Radio 5 live

    The Bank of England's Martin Weale has been telling Wake Up to Money why he's been voting for interest rates to move off the record low of 0.5%. "It isn't only that unemployment has been falling - at least until recently extremely rapidly. It's also that when I go and visit businesses throughout the country I find they're talking of pay increases in a way quite different from what I was hearing early in the year certainly this time last year."

     
  23.  
    06:16: Markets Radio 5 live

    Brenda Kelly from IG is Wake Up to Money's markets guest. They are talking about the falling oil prices. "A lot of it is down to a glut of supply and Saudi Arabia wants to keep market share," she says. Saudi's breakeven price is only a few dollars per barrel.

     
  24.  
    06:10: Christmas spending Radio 5 live

    Mark Barnett, UK & Ireland president of Mastercard, is on Wake Up to Money, talking about Christmas shopping habits. What else? People have returned to luxury goods, he said. Holidays and furniture are down a little bit though.

     
  25.  
    06:04: Hacking 2.0
    Kim Jong

    The global cyberwar that dominated headlines last week shows no signs of abating. Hackers have infiltrated South Korea's nuclear power provider, and posted schematics of nuclear reactors and private personal records online. It's not clear whether the same group that attacked Sony Pictures is responsible.

     
  26.  
    06:00: Howard Mustoe Business reporter

    Morning! Get in touch. Tell us what you think. Email bizlivepage@bbc.co.uk or on Twitter @BBCBusiness

     
  27.  
    06:00: Joe Miller Business Reporter

    Good morning, and festive greetings all round. In a week when the business world is winding down for Christmas, we'll bring you all the news that's sneaking in the back door, and much more besides.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.