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Government pledges £2bn support for Hinkley Point C

21 September 2015

Chancellor George Osborne has announced a government guarantee for a new nuclear power station planned in Somerset, whilst on a five day tour of China.

Computer generated image of the two reactors planned for the Hinkley Point C Nuclear Power Station site (image courtesy of EdF Energy)

Chancellor of the Exchequer George Osborne has insisted new nuclear power stations are essential to make sure the lights stay on, as he gave the green light to the initial government guarantee for the first such plant in Britain for 20 years. While on a five day tour of China, Mr Osborne announced the guarantee, provided by Infrastructure UK, for a new nuclear power station planned for the Hinkley Point C site in Somerset.

The initial deal is set to be worth around £2 billion* and will pave the way for a final investment decision by energy company EdF, supported by China General Nuclear Corporation and China National Nuclear Corporation, later this year, and with further amounts potentially available in the longer-term.

The construction and operation of Hinkley Point C are expected to create thousands of jobs in Somerset and more widely in the nuclear industry across the UK, as well as boosting Britain’s energy security.

The new plant is expected to produce enough energy to supply seven per cent of the country’s needs, powering around six million homes. It is also expected to open the door to unprecedented collaboration in the UK and China on the construction of new nuclear power stations.

The agreement also boosts work being carried out under a Memorandum of Understanding on fuel cycle collaboration signed with China in 2014, which has the potential to leverage UK expertise in waste management and decommissioning as well as support UK growth.

During the next ten years, Britain is expected to need to replace around quarter of its capacity due to ageing nuclear and coal power plants retiring, which the new Hinkley Point power station will help achieve.

Welcoming what she described as a long overdue announcement, Dr Jenifer Baxter, head of Energy and Environment at the Institution of Mechanical Engineers, said Nuclear is set to play a central and vital role in the UK’s energy future.

“Although the financial costs of nuclear power seem high, with the upfront cost of Hinkley Point C over £16 billion, this power station will provide and modernise the diversification we so badly need in ensuring the UK’s lights stay on," she says. 

“Nuclear is currently one of the least CO2-intensive ways to generate base-load electricity.  It is a vital part of the electricity mix we need in addition to gas-generation and renewables. At present, there is no viable alternative that will enable us to meet our emission targets.

“It is positive news that the Government is investing to secure energy supplies in the UK, however, it is important to consider that different technologies will have different total whole life costs.  Considered within these costs are land use, developing a skills base, materials, labour, production, environmental impact, waste disposal and decommissioning.  It is also critical that investments, such as this create opportunities beyond power supply in the long term development of precision engineering roles and economic benefits to local communities.

“Government now needs to push forward with the development of other nuclear power sites, in places like Wylfa and Oldbury as well as other types of nuclear, like Small Modular Reactors (SMRs). SMRs present a lower cost option, with comparatively straightforward construction and, potentially, a more attractive investment proposition. They would be factory-manufactured and assembled on site, and likely cost in the region of £1-2 billion.

“Whilst the development of a new nuclear power station is positive news, the Government must encourage significant investment in the whole nuclear fuel life-cycle.  Investment in research and development to understand further the nature of radioactive waste, the potential for further energy production both heat and power and the opportunities for reducing radioactive half-life are all vital in developing a safe nuclear industry.

"Concerns over the disposal and long-term management of these wastes must also be addressed, with proper testing for geological disposal of radioactive wastes taking around 20 years. The Government must also take steps to secure potential sites for disposal with long-term testing strategies, without which nuclear power generation will continue to leave a significant waste challenge for future generations.”

* The European Commission approved the Hinkley Point C state aid case in October 2014. The £2 billion is covered by that approval with further amounts available should EdF meet certain conditions and subject to fuller government approvals.

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