George Osborne just signed off a £2 billion pound government subsidy for a new nuclear power station at Hinkley Point in southwest England.
The Chancellor made the announcement on his trade visit to China, which is backing the project.
The guarantee will pave the way for Britain’s first newly built nuclear power station in over 20 years, according to Osborne.
Osborne said: “Britain was the home to the first civil nuclear power stations in the world and I am determined that we now lead the way again.
“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. It is another move forward for the golden relationship between Britain and China – the world’s oldest civil nuclear power and the world’s fastest growing civil nuclear power.”
EDF is receiving a guaranteed price of 92.5 pounds per megawatt hour for 35 years for output from Hinkley Point C.
Chief executive of EDF Energy, Vincent de Rivaz, called Osborne’s approval of an infrastructure guarantee a “clear sign” of the government’s commitment to Hinkley.
‘We welcome the Government’s support for the industrial participation by EDF and its Chinese partners,” he said. “It is further progress towards a final investment decision on a project which will provide reliable, affordable low-carbon electricity for decades,”
Hinkley plans have been delayed
The project has faced a number of problems. The main developer of the project, EDF, recently said that it could be further delayed.
The plans have been subject to harsh criticism from the energy industry, with many analysts questioning the economics of the project. It is estimated to cost £24.5 billion in total, which is more than the combined cost of the revamped Terminal 2 at Heathrow, Crossrail, and London 2012 Olympics.
However, despite the high costs associated with the new plant the UK government is still 100 percent committed to its completion.
Why is the Hinkley station important?
Britain is in need of new investment in energy infrastructure. Current infrastructure in the UK is becoming outdated and are polluting sources.
Over the last five years a total of 26 power stations have closed across the country, which accounts for 20% of the UK’s generation capacity.
By 2030 an additional 35% of existing generation capacity is forecast to shut down.
Once constructed, Hinkley Point C is expected to provide 7% of the the country’s electricity for six decades whenever it is needed, during winter and summer, day and night.