UK Nuclear Plant to Be World's Costliest

UK Nuclear Plant to Be World's CostliestUK Nuclear Plant to Be World's Costliest

The UK and China are set to announce an accord that will give the Asian nation a stake in Electricite de France SA’s Hinkley Point project, Britain’s first nuclear plant in three decades and the most expensive atomic energy station ever.

The proposed deal is likely to be announced during a state visit to Britain by Chinese President Xi Jinping this week and follows protracted talks between EDF and its Chinese partners, Bloomberg reported.

The two nations will publish investments and deals worth a “huge” amount of money, including on nuclear power, Zhang Ji, assistant minister of commerce, said last week in Beijing. EDF will still have to make a final investment decision.

The UK government says new nuclear plants are a crucial part of the energy mix, as Britain plans to cut carbon emissions while securing predictable electricity supplies.

With construction costs estimated at nearly $38 billion by the European Commission and bolstered by UK subsidies at twice the current wholesale power price, opponents have described Hinkley as “the most expensive object on earth.”

EDF, the world’s biggest operator of reactors, and the UK agreed two years ago that Hinkley will get 92.50 pounds per megawatt-hour of power for as long as 35 years. That is competitive with new-build gas and renewable projects and will give it a rate of return of 10%, according to the company.

The long-delayed project was originally planned to start in 2017, a deadline that has since been pushed to 2023, with EDF Chief Executive Officer Jean-Bernard Levy signaling further delays in September.

To accelerate the deal, UK Chancellor of the Exchequer George Osborne pledged a guarantee of £2 billion for construction of the plant, during a visit to Beijing last month.

Nuclear power will only become more important for the UK in the next decade, as the nation debates closing all its 12 coal-fired power plants by 2023 to combat global warming.

EDF’s 1.2-gigawatt Sizewell B plant is the only one of the UK’s 15 reactors scheduled to generate beyond 2023, and with Britain facing a squeeze on supplies, Rudd’s main job is to ensure enough new generation gets built to replace retiring plants. It has the same technology as the two units at Hinkley Point and the startup of the unit has been pushed back to the end of 2018, 11 years after construction began. Costs have more than tripled to $11.7 billion.