Earth Video
Tree diseases
New nuclear plant at Hinkley Point to begin construction 'within weeks'
Go-ahead for first new UK nuclear plant in a generation after Chinese agree to fund one-third of £18 billion cost
By Emily Gosden, Energy Editor
5:30PM BST 21 Oct 2015
Construction of Britain's first new nuclear plant in a generation will begin "within weeks", developer EDF has announced, after a Chinese state-backed nuclear company agreed to fund a third of its £18 billion cost.
A deal between the French and Chinese companies, hailed as "historic" by David Cameron, was signed in the presence of the Prime Minister and Chinese President Xi Jinping on Wednesday afternoon.
Hinkley is now expected to start generating in 2025, eight years later than originally planned, and should provide 3.2 gigawatts of power - enough to meet seven per cent of the UK's electricity needs - for 60 years.
The twin-reactor plant could employ 5,600 people at peak during its decade-long construction, the "vast majority" of them British, EDF said, and will be subsidised by UK energy bill-payers for the power it produces for up to 35 years.
EDF and China General Nuclear Power Corporation (CGN) also confirmed they will work together on two further plants: at Sizewell in Suffolk, where CGN will fund 20 per cent of development costs; and at Bradwell in Essex, where CGN plans to use its own reactor design and will fund two-thirds of the development costs.
Bradwell would be the first place Chinese nuclear technology has been used in the West, if the design gets safety clearance for use in the UK.
Jean-Bernard Lévy, EDF group chief executive, said he expected a final investment decision on Hinkley to be taken in "a few weeks" once formalities to sign off the "heads of terms" deals announced on Wednesday were concluded.
Preparatory work has already been undertaken at the Somerset site in recent years but had ground to a halt pending a deal to fund the plant.
Construction will now begin as soon as the final decision is taken, with hundreds of workers expected on site by the end of the year, EDF said.
David Cameron and Xi Jinping ahead of bilateral talks on Wednesday Photo: Eddie Mulholland
Hinkley was originally supposed to be online by Christmas 2017 but the date has slipped repeatedly.
Although the first reactor at Hinkley is now expected online by 2025, with the second reactor six to 12 months later, the subsidy contract would allow first power to be delayed until as late as 2033, Vincent de Rivaz, chief executive of UK division EDF Energy confirmed.
Hinkley will be the first nuclear plant in the Western world to commence construction since the Fukushima disaster.
Mr Lévy said the plant would cost £18 billion, which he said was expressed in nominal terms and "exactly" in line with the £16 billion in 2012 money that the company had previously quoted.
A £24.5 billion cost estimate from the European Commission was now "irrelevant" due to a "radical change" in EDF's funding arrangements, the company said.
Artist's impression of the proposed plant Photo: EDF
EDF had previously planned to use project financing for Hinkley, borrowing up to £16 billion of debt specifically to fund the plant - backed by loan guarantees offered by the UK taxpayer.
Instead EDF, which is majority owned by the French state, will fund its £12 billion share of the plant from its own group balance sheet through a combination of equity and borrowing, and may not need to use any UK Government guarantees beyond the initial £2 billion tranche already signed off.
The site where Hinkley Point will be built Photo: EDF
Mr Lévy said the new plan would be a more "efficient" option, but acknowledged other reasons for the change included conditions attached to the UK loan guarantees, such as a cap on the amount EDF could borrow until the reactor technology to be used at Hinkley was proven to work at another site in France.
Construction of the 'EPR' reactor at the Flamanville has been beset by problems and is running years behind schedule. Once due online in 2012 it is now not expected until 2018 at the earliest.
Preparatory earthworks have been undertaken at Hinkley in recent years but work has ground to a halt pending a final investment decision. Photo: EDF Energy
Under the subsidy deal for Hinkley, UK energy bill-payers will pay £92.50 (in 2012 money) for every megawatt-hour unit of power that Hinkley generates for the first 35 years - more than double the current market price of power.
The price will be indexed to inflation and could add £13 to household energy bills in 2026, according to analysis by CF Partners.
Hinkley Point C is likely to be the most expensive power station ever built & it's largely families and business who are picking up the tab.
— Lisa Nandy (@lisanandy) October 21, 2015
Although the deal was negotiated based on EDF's previous funding model, Mr de Rivaz said the return on investment would remain the same as had been envisaged, at around nine to 10 per cent.
EDF said it would reopen talks with other investors to sell down part of its stake in Hinkley once construction was underway, but it intended to retain at least a 50 per cent stake.
There was "no time pressure to do so", Mr Lévy said. "Maybe at the end of the day we will keep 66.5 [per cent] if nobody joins, we are very open on this," he said.
Mr de Rivaz said CGN could begin the UK safety assessment of its reactor design for the Bradwell plant next year, a process likely to take three to four years.
It would then need to seek planning permission and a subsidy contract, potentially allowing it to start building the plant around 2022 or 2023, he suggested.
Hinkley Point nuclear plant: the story so far
Plans for a new nuclear plant in the UK have been a decade in the making. We chart their progress.
Energy review launched
Tony Blair, the then-Prime Minister, announces a review into UK energy policy that will consider development of new nuclear power stations.
Blair backs new nuclear
Blair says the replacement of Britain's existing nuclear plants is "back on the agenda with vengeance" and that failing to take action would be a "dereliction of duty".
Formal go-ahead for new nuclear
Energy review concludes nuclear can make a "significant contribution" to securing Britain's energy needs. Alistair Darling, then-industry secretary, says it will be up to the private sector to "initiate, fund, construct and operate" the nuclear plants.
EDF: New nuclear 'by Christmas 2017'
French nuclear energy giant EDF says it hopes to build Britain's first new nuclear power plant in a generation in time to provide electricity for Britons to cook their Christmas turkeys in 2017. "EDF will turn on its first nuclear plant in Britain before Christmas 2017 because it will be the right time," Vincent de Rivaz, chief executive of UK division EDF Energy says. "It is the moment of the power crunch. Without it the lights will go out."
Reactor safety checks begin
EDF Energy and Areva submit their power plant design, the EPR, to begin safety checks by regulators.
Government: First plant 'well before 2020'
John Hutton, then business secretary
New nuclear gets formal backing from the Government. John Hutton, then-business secretary, says he hopes the first new plant will be completed "well before 2020".
British Energy deal
EDF buys British Energy, owner of Britain's existing nuclear power plants, for £12.5 billion and unveils plans to build four new nuclear reactors in the UK.
Hinkley Point consultation begins
EDF begins consultation with local residents about building a new nuclear plant adjacent to the existing Hinkley Point B power plant in Somerset.
EDF: New nuclear for £45/MWh
EDF tells investors in London that the average cost of four reactors - two at Hinkley Point and two at Sizewell - should be £45 per megawatt-hour of power. The first Hinkley reactor should be generating by the end of 2017, with the second in 2018, and Sizewell's two reactors to follow in 2021 and 2022.
Centrica backs nuclear
British Gas owner Centrica takes 20 per cent stake in EDF's UK nuclear fleet and acquires option for 20 per cent stake in new nuclear plants.
Badger problems
EDF is forced to defend its environmental record as it relocates a colony of badgers off the land earmarked for Hinkley Point.
EDF: Hinkley can be ready by 2018
Vincent de Rivaz says 2011 must be a "year of delivery" for new nuclear and that Hinkley Point can be ready in 2018 if the Government moves quickly to introduce "market reform" - in other words, new subsidies.
Fukushima disaster
Japan's Fukushima Daiichi nuclear plant is badly damaged by earthquake and tsunami, leading to a meltdown and explosions. Chris Huhne, the UK's energy secretary, commissions an urgent review into the safety of proposals for new nuclear in the UK. The Health and Safety Executive and Environment Agency say their assessment of the proposed new reactor designs will be delayed as a result.
Weightman review
Review by Mike Weightman concludes Britain's strategy of new nuclear plants can proceed but puts forward a series of recommendations to adapt the safety approval process in light of the Fukushima disaster.
New subsidy regime announced
Chris Huhne, then energy secretary
Government unveils 'electricity market reform' plan, including new 'contracts for difference' - long-term subsidy contracts for low carbon electricity, which will be used to support new nuclear plants.
Planning application submitted
EDF submits 55,000-page planning application for Hinkley Point C to the Planning Inspectorate. Mr de Rivaz sets a target of the end of 2012 to take a final investment decision on the project.
First power slips to 2019
The Government admits the first new reactor will now not start generating until 2019.
Hinkley work begins
Initial preparatory works begin at the Somerset site.
Subsidy talks underway
Ed Davey
Ed Davey, the energy secretary, confirms that talks have begun with EDF over the terms of subsidies for Hinkley. Under Government plans EDF will receive a fixed "strike price", guaranteeing it a certain price for each unit of power the new plant generates - irrespective of the market price.The difference between the market price and the guaranteed price will be "topped up" with subsidies paid for by energy consumers.
EDF seeks more investors
Vincent de Rivaz, EDF Energy chief, confirms he wants a deal by the end of 2012. He says the company is also "opening the search" for more investors to join the project, but denies this is because Centrica is rumoured to be considering quitting.
Safety approval - but no investment decision
EDF's reactor design gets safety approval, while Mr de Rivaz admits the company will not take final investment decision by the end of the year as had been planned.
Centrica quits
British Gas owner Centrica pulls out of new nuclear plans, citing spiralling costs and delays. Nick Luff, Centrica finance director, says: "I'm sure EDF are very confident in their cost predictions and their timetables... We still think there is uncertainty."
Planning granted but subsidy talks falter
Talks over subsidies reportedly stall as the Treasury intervenes in price negotiations with an offer well below level EDF was seeking. EDF begins laying off staff at Hinkley Point C while chief executive Vincent de Rivaz warns staff the negotiations are at a "critical" stage and "very challenging". Meanwhile planning permission for Hinkley is granted by Ed Davey, the Energy Secretary.
Decision 'by the end of the year'
EDF group chief executive Henri Proglio says it expects to take a decision on building Hinkley Point by the end of the year.
Subsidy deal; first power due 2023
Pic: AFP/Getty Images
Government announces provisional agreement of deal with EDF Energy over subsidies for the project, the cost of which is revealed to have reached £16 billion. The Government agrees EDF should receive a guaranteed a price of £92.50 – twice the current market price of electricity - for each megawatt-hour of power that the reactors generate over a 35-year period. The subsidies, which are heavily criticised by some, will be funded through levies on all consumer energy bills. EDF says it plans to retain a 45pc to 50pc stake in the project. Reactor-maker Areva will take 10pc, Chinese groups China General Nuclear Corporation and China National Nuclear Corporation will take a combined 35pc to 40pc stake, and other parties will take up to 15pc. EDF says that Hinkley will now not produce its first power until 2023, subject to taking a final investment decision in July 2014. "In 2023, this project will arrive exactly when the country will need it," Vincent de Rivaz says. David Cameron hails the agreement as "a very big day for our country: the first time we've built a new nuclear power station for a very long time".
State aid investigation
EC launches state aid investigation into the subsidies for the project, which it says could reach £17bn and may be unnecessary.
Investment decision delay
EDF admits its July deadline for taking an investment decision will not be met as the EU investigation drags on.
Further construction work
EDF begins the second stage of preparatory works at the site including building roundabouts and construction roads.
State aid approval
European Commission gives state aid approval for Hinkley Point and says the plant will in fact cost £24.5 billion.
March decision deadline
EDF says it wants to take a decision by the end of March 2015.
Decision delayed again
EDF abandons the March deadline, saying only that a final investment decision is "possible in the next few months" and warning of long list of outstanding issues including agreeing deals with the Government and with investors. "We are in the final phase of negotiations, but that phase can take a considerable amount of time, depending on the number of problems left to resolve," Jean-Bernard Levy, EDF group chief executive, says.
Rudd: 'very good prospect' of decision this year
Amber Rudd, the energy secretary, says there is a "very good prospect" of a decision to build Hinkley being taken later in the year and says the project is "essential".
EDF admits first power delay
EDF group chief executive Jean-Bernard Levy says the 2023 first power date can no longer be met. He says a new date will be given when the company takes a final investment decision, and the decision will be based on solely EDF and Chinese investment.
£2bn loan guarantee confirmed
Chancellor George Osborne announces he has approved an initial £2bn loan guarantee for Hinkley.
Work to begin 'within weeks' after China deal; completion date 2025
Chinese President Xi Jinping and Prime Minister David Cameron announce the deal
EDF announces it expects to begin construction at Hinkley "within weeks" after signing a deal with China General Nuclear Power Corporation (CGN), which will provide one-third of the cost - now estimated at £18 billion. First power is now scheduled for 2025. As part of the deal, CGN will also take a 20 per cent stake in developing a second EDF-led plant at Sizewell, and will try to develop its own reactor with EDF's backing at Bradwell in Essex. EDF says the £18 billion cost is consistent with the £16 billion it cited previously but is simply in today's money, after inflation. It says the £24.5 billion estimate is now "irrelevant" as it has changed how it is financing the project. David Cameron hails the deal as "historic".
thetelegraphnews
Follow @telegraphnews