China to pick stake in EDF’s $38-bn N-power plant in Britain

Chinese investors are expected to pick up a stake in the Hinkley Point nuclear power plant that French nuclear utility Electricite de France SA's (EDF) is building for Britain.

An announcement about the extent of Chinese participation in the £25 billion ($38-billion) project will be made during a visit of Chinese President Xi Jinping to Britain on Tuesday and Wednesday.

The Hinkley Point project is Britain's first nuclear plant in three decades and the most expensive atomic energy station ever.

Once construction is completed, Hinkley Point will provide 3.2 GW of power 24 hours a day for 60 years.

EDF chief executive Jean-Bernard Levy on Sunday said his company is in final negotiations with its Chinese partners, but said he did not want to anticipate what would happen on Tuesday and Wednesday.

"If all goes well, we will be able to announce major news in coming days; the first nuclear new-build in Europe since the Fukushima accident," Levy said on television station iTELE.

Originally, China General Nuclear Corporation (CGN) and China National Nuclear Corporation (CNNC) were set to take a combined 30-40 per cent, Levy said.

"We expect to put in place a partnership with CGN, which has been our partner in China for more than 30 years," Levy said, without mentioning CNNC.

Levy also said he expected EDF would finalise its agreement to buy 51-per cent of Areva's reactor unit Areva NP by the end of next year.

The Hinkley Point nuclear power consists of two Areva-designed EPR reactors of 1.6  GW capacity each, together capable of generating 3.2 GW electricity.

The project, originally estimated to cost £16 billion ($25 billion), was announced in October 2013, but financial problems at Areva and long delays at two EPR reactors under construction in France and Finland delayed the British project.

China and the UK are expected to announce deals worth of billions of pounds, including the deal on nuclear power during Jinping's visit to Britain, Zhang Ji, assistant minister of commerce, said last week in Beijing.

EDF, which has been in protracted talks with its Chinese partners, will still have to make a final investment decision.

For the UK government, however, nuclear plants are a crucial part of the energy mix as Britain plans to cut carbon emissions while securing predictable electricity supplies.

With construction costs estimated at £24.5 billion ($37.9 billion) by the European Commission, Hinkley Point C is ''the most expensive object on earth,'' even compared to most expensive of nuclear power plants.

And, with power generation costs at twice the current wholesale power price, the project, is bolstered by UK subsidies.

EDF, the world's biggest operator of reactors, and the UK agreed two years ago that Hinkley will get £92.50 per megawatt-hour of power for as long as 35 years. That's competitive with new-build gas and renewable projects, and will give it a rate of return of 10 per cent, according to the company.

EDF's UK unit will shoulder all the construction costs associated with building Hinkley Point C and no costs will fall on the tax payer, it said on Friday.

Reports, meanwhile, said the French government wanted EDF and Areva to keep a combined 66 per cent stake in Areva NP - 51 per cent for EDF, 15 per cent for Areva - and that EDF should look for one or more partners for the remaining 34 per cent.

Since the deal on power prices, the utility has been negotiating with China General Nuclear Power Corp and China National Nuclear Corp over the size of their stakes in Hinkley, which was also the subject to a 10-month competition probe by the European Commission. 

The long-delayed project was originally planned to start in 2017, a deadline that has since been pushed to 2023, with EDF Chief Executive Officer Jean-Bernard Levy signaling further delays in September.

To accelerate the deal, Chancellor of the Exchequer George Osborne pledged a guarantee of £2 billion for construction of the plant, during a visit to Beijing last month.

EDF Energy is today announcing Ovivo as preferred bidder in a contract worth over £10 million as it prepares to make a final investment decision for the Hinkley Point C nuclear power station.

The contract will help secure jobs in the UK and provide a boost to the UK's manufacturing sector.