UK to guarantee £2-bn deal nuclear plant deal for Chinese investment

Chancellor George Osborne has announced that the UK would guarantee a £2-billion deal under which China would invest in the UK's Hinkley Point nuclear power station.

According to Osborne, who is on a China visit,  the deal would pave the way for a final investment decision on the delayed project by French energy company EDF.

He added it would also allow greater collaboration between the UK and China on the construction of nuclear plants. According to reports one such reactor could be built at Bradwell in Essex.

According to energy secretary Amber Rudd who spoke to the Financial Times she wanted Beijing to take the lead in developing new nuclear plants in the UK.

She added China was expected to lead the construction of a Beijing-designed nuclear station at the Essex site.

Though the news was welcomed by EDF, it did not say if it put the project back on track.

Earlier this month, EDF admitted the Hinkley project in Somerset, which would allow the plant to generate power by 2023, would be delayed.

The firm announced in February that it had deferred its decision on whether to invest in the plant.

Since the estimated £24.5-billion cost was way beyond EDF's capacity to raise on its own, it had been looking for financial partners to invest, especially in China. This had proved difficult, which was the reason the government had had to step in to guarantee part of the cost.

Osborne said the UK was a "great home" for Chinese investment, after revelation that the new nuclear power station at Hinkley Point in Somerset would be partly-funded by Chinese money.

Osborne said the proposed plant was "essential" to ensure the lights stayed on as ageing nuclear and coal plants are retired over the coming 10 years.

He added, the deal "paves the way for Chinese investment in UK nuclear and helps to secure the power supply for our country into the future.

"I think it is a partnership that is good for both countries."

Hinkley Point C near Bridgwater would be the UK's first new nuclear power station for 20 years costing a total £25 billion, with the government providing £2 billion by way of initial support.

Austria's announcement in July that it would challenge state aid for a new nuclear plant in the UK comes as the latest step in the country's lone campaign to roll back atomic energy in Europe (See: Austria to challenge state aid to nuclear plant).