UK nuclear power plant set for go-ahead - BBC News

20 October 2013 Last updated at 22:40 ET

The government is set to give the go-ahead for the UK's first new nuclear station in a generation.

France's EDF Energy will lead a consortium that includes Chinese investors, to build the Hinkley Point C plant in Somerset.

Ministers say the deal will help take the UK towards low-carbon power and lower generating costs in future.

Critics warn guaranteeing the group a price for electricity at twice the current level will raise bills.

The two reactors proposed for Hinkley, which will provide power for around sixty years, are a key part of the coalition's drive to shift the UK away from fossil fuels towards low-carbon power.

Ministers and EDF have been in talks for more than a year about about the minimum price the company will be paid for electricity produced at a site which has an estimated construction cost of between £15bn and £16bn.

It is understood that the two sides have now agreed the "strike price" for every megawatt of power Hinkley C would generate per hour.

Chancellor George Osborne removed another obstacle last week when he announced that Chinese firms will be allowed to invest in civil nuclear projects in the UK.

'Deep pockets'

The existing plant at Hinkley currently produces about 1% of the UK's total energy, but that would rise to 7% once the expansion is complete in 2023.

However, BBC business correspondent Joe Lynam says this will come at a price, with the government promising to pay the owners of Hinkley Point a fixed fee of £92.5 for every megawatt of power generated per hour.

"That's almost twice the current wholesale market price for electricity at around £50," he said. "And the government will be paying that price for 30-40 years irrespective of whether market prices soar or collapse."

Dr Paul Dorfman, from the Energy Institute at University College London, said "what it equates to actually is essentially a subsidy and the coalition said they would never subsidise nuclear".

He added: "It is essentially a subsidy of between what we calculate to be £800m to £1bn a year that the UK taxpayer and energy consumer will putting into the deep pockets of Chinese and French corporations, which are essentially their governments."

The expected announcement will not be legally binding and it will be 2014 before EDF makes a final investment decision on the project. The plans also will requires state aid clearance from the European Commission.

But comes as concerns about domestic energy bills move up the agenda after SSE and British Gas, two of the UK's "big six" gas and electricity suppliers raised prices.

The government estimates that the average bill in 2030 will be £77 lower than they would be without new nuclear.

The Archbishop of Canterbury Justin Welby and Deputy Prime Minister Nick Clegg both raised concerns about the increases on Sunday.

Mr Welby told the Mail on Sunday the companies had to be "conscious of their social obligations" and "behave with generosity and not merely to maximise opportunity".

Mr Clegg told Sky News that gas and electricity companies should provide more evidence that the price rises were needed at all.