DAVID CAMERON will this week sign a landmark deal with China, thrusting the communist nation into the heart of Britain’s civil nuclear industry.
Under the controversial accord, Beijing will buy a large minority stake in Britain’s first new atomic reactor in 20 years. The investment will help EDF Energy of France, which will lead the project, cover part of the mammoth £24bn cost. The Chinese are also expected to help bankroll a second EDF plant at Sizewell on the Suffolk coast.
In return for its multibillion pound injection, Whitehall will give China its blessing to construct its own prototype nuclear reactor in Bradwell, Essex. The plant would be the first Chinese-designed and operated facility in the West.
Final details were being hammered out in last-minute talks this weekend, despite concerns raised by British intelligence agencies over allowing Beijing to take such a central role in national infrastructure.
One of the two state-controlled companies set to invest, China National Nuclear Corporation (CNNC), boasts on its website that it “successfully developed the atomic bomb, hydrogen bomb and nuclear submarines”.
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The deal, being driven by chancellor George Osborne, is expected to be announced at a press conference this week during President Xi Jinping’s state visit. The sealing of the new Sino-British atomic alliance will mark a culmination of two years of negotiations. The broad contours were first announced in October 2013 by former energy secretary Ed Davey. EDF, France’s state nuclear monopoly, agreed to build two atomic reactors at Hinkley Point, Somerset. The plant will take nearly a decade to complete and cost £24bn, making it one of the most expensive power stations in the world.
To cover that cost, the government agreed to pay EDF and its Chinese partners — CNNC and China General Nuclear — huge subsidies. These will be tacked on to household bills and pay out until 2060.
A sticking point in this weekend’s negotiations is how much involvement China has not just in Hinkley Point but also the second power station, at Sizewell in Suffolk.
In return for Beijing’s financial support on those plants, EDF plans to sell its rights to a development site it owns at Bradwell. The French would become a minority partner and assist the Chinese through Britain’s approval process for a new reactor design, which is among the most arduous in the world.
Beijing would then use that certification as a selling point as it bids to become the world leader in nuclear technology.
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Hoping to minimise its share of the costs, EDF is pushing for the Chinese to take an equity stake of up to 40% in Hinkley. China has argued for a smaller 30% stake.
At Sizewell, China is understood to be pushing for a 60% stake and may even insist on inserting its own technology — possibly its own reactor. This would effectively fasttrack its plans for its first reactor in Britain. Under current plans, Bradwell will only begin after Hinkley and Sizewell have been built.
Osborne has urged the Office for Nuclear Regulation (ONR) to begin its generic design assessment of the Chinese design by April. The process takes several years.
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Whitehall’s courting of Beijing has caused a rift with Japan. Hitachi and Toshiba have plans for atomic plants at Anglesey, Gloucestershire and Cumbria. The Japanese conglomerates are understood to be furious that China’s fast-tracking could divert ONR resources, delaying its assessment of their rival schemes.
The subsidy rate for Hinkley starts as £92.50 per megawatt hour of power produced is more than double the current wholesale rate and will rise every year with inflation.
The sheer cost and time required to build the project means few investors other than the Chinese government would sign up.