The British government said on Thursday it was giving the green light to a controversial new nuclear project at Hinkley Point after Prime Minister Theresa May ordered a review.
“Having thoroughly reviewed the proposals for Hinkley Point C, we will introduce a series of measures to enhance security and will ensure Hinkley cannot change hands without the government’s agreement,” Business Secretary Greg Clark said in a statement.
“Consequently, we have decided to proceed with the first new nuclear power station for a generation.”
The board of French state-owned power company EDF approved its involvement in the project in southwest England on July 28, only for Britain’s new government under May to announce hours later that it wanted to review it.
China has a one-third stake in Hinkley Point and analysts warned that Britain would have risked its relations with the world’s second-largest economy if it cancelled the costly deal.
A blog post written last year by Prime Minister May’s new chief of staff had exposed concerns about UK energy security and cast a shadow over British-Chinese relations. Nick Timothy warned the involvement of Chinese partners in the project could allow them to “shut down Britain’s energy production at will”.
The decision to go ahead with the project may ease tension with China, which had called for Britain to proceed with the project immediately after the review was announced.
China’s Foreign Ministry did not immediately respond to a request for comment.
Critics of the deal had expected Britain to try to renegotiate the price, which they claimed was set too high before oil prices fell, dragging energy costs lower, but the statement said the price the government will pay for the energy had not changed.
An aide to Francois Hollande said May had called French president personally to say “she supported the launch of the Hinkley project”.
The French government on Thursday welcomed Britain’s decision to approve the construction of a nuclear plant.
“This marks a major milestone in Franco-British industrial and energy cooperation,” French Economy minister Michel Sapin said in a statement.
Approval of the project crowns almost a decade of efforts by EDF to prepare for the replacement of its UK nuclear plants, acquired when it took control of British Energy Plc in 2008.
The previously agreed contract for the facility guaranteed the French company could sell the power generated at more than double current market prices for as long as 35 years.
The project is also of strategic importance for China.
State-owned China General Nuclear Power Corp, which is due to provide a third of the finance for Hinkley Point, intends to take a minority stake in a similar nuclear reactor at Sizewell in the UK and then a majority holding in another at Bradwell, which will use Chinese technology.
The project, which will take almost 10 years to construct, will provide a 9 per cent annual return if built on time and on budget, according to Levy.
EDF’s labour unions wanted the UK project to be delayed by about three years to benefit from feedback from reactors being built in France, Finland and China.
At Flamanville in France, where the utility is building a reactor of the same design proposed for Hinkley Point, costs have more than tripled to 10.5 billion euros (HK$91.5 billion) and construction is six years behind schedule.
Agence France-Presse, Reuters, Bloomberg
LINK TO UK GOVERNMENT STATEMENT ON THE DEAL: