After unexpectedly announcing a review at the end of July, the UK government has given the go-ahead for construction of the nuclear power station at Hinkley Point. This is the most important strategic decision since Theresa May became prime minister — one that has a bearing not only on the UK’s future competitiveness, but on its relations with China and France.
Regrettably, Mrs May has eschewed the chance to amend the commercial terms of the project, to be built at the gargantuan cost of ￡18bn by EDF, the French utility, with co-investment from the China National Nuclear Corporation (CNNC) and China Guangdong Nuclear Power. She has, though, announced a plan for new rules governing foreign investment in critical infrastructure. The impact of these on the nuclear programme is uncertain. If sufficiently stringent they could yet put the Hinkley project in doubt.
When it was first conceived a decade ago as part of plans to kick-start a nuclear “renaissance” as old coal-fired plants become obsolete, the Hinkley project was a more attractive proposition. Expected to be competitive with other power sources, it would also help Britain meet ever tougher emissions targets. A decade on — and at a time when the costs of wind power, solar energy and natural gas have all been falling — the price built into the deal is nearly four times higher. The French utility will receive more than double the present UK wholesale power price, indexed and guaranteed for 35 years. Questions therefore remain as to whether the project marries Britain’s energy needs with emission reduction targets in the most cost-effective way.