Nuclear power

On 21 October 2013 the Secretary of State for Energy Edward Davey announced in a Statement that a deal had been reached between EDF Energy and the Government to build the first new nuclear power station in the UK since Sizewell B was commissioned in 1995. It will be funded by the private sector but will receive a guaranteed price for the electricity it generates.

This follows lengthy negotiations over the price to be guaranteed for the energy, the contract length, and attracting partners to share the cost. The negotiations have taken place during the passage of the current Energy Bill,which will introduce new ‘contracts for difference’ subsidy arrangements for all low-carbon forms of generation. These will replace the Renewables Obligation subsidy, which applies to renewables only.

The contract length will be 35 years, and the ‘strike price’ guaranteed will be £89.50, to rise in line with inflation. This is provided that EDF go on to build Sizewell C as well, so that ‘first of a kind’ costs can be shared with EDF’s subsidiary NNB Generation Company Limited (NNBG) building similar EPR reactors at both the Hinkley Point C and Sizewell C sites. If this does not happen, the strike price will be £92.50 for Hinkley C.

As part of the deal, under a Memorandum of Understanding on civil nuclear cooperation between the UK and Chinese Governments, EDF will be allowed to sell minority stakeholdings in Hinkley Point C to the Chinese companies, CGN and CNNC.

Overall now, it is highly likely that nuclear power will continue to make an important contribution to the UK’s electricity needs within a “mixed economy” of gas, coal and renewables.