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The UK government has finally agreed a deal with EDF to build the first nuclear power plant in Great Britain for 20 years, the first of many in a new era of nuclear power, according to British Prime Minister David Cameron.
The NY Times reports that Ed Davey, the energy secretary, is proud of the deal struck with the French energy company EDF, and that it will result in an energy bill reduction of £75 by 2030.
The UK guaranteed to buy the energy produced at the plant at a price of £92.50 per megawatt-hour for 35 years. This is reported as double the current wholesale market price, and will fuel protests that the government is paying out massive subsidies for non-carbon fuels, and that the majority of these subsidies will go to France and China, as the two main investors in the project.
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The UK government is already under pressure over claims that its green subsidies, attempting to encourage renewable energy investment ahead of approaching mandates, are causing energy prices to increase.
Prime Minister Cameron proclaimed that “this is a very big day for our country: the first time we've built a new nuclear power station for a very long time … kick-starting again this industry, providing thousands of jobs and providing long-term, safe and secure supplies of electricity far into the future.”
Labour have been quick to criticise the deal struck with EDF, with Caroline Flint, the shadow energy secretary, remarking that “David Cameron is now in the ridiculous position of saying that they can set prices 35 years ahead for the companies producing nuclear power, while insisting they can't freeze prices for 20 months for consumers while much-needed reforms are put in place.”
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Based on the agreed price of £92.50 per megawatt-hour, EDF should make a 10% rate of return on its investment over the lifetime of the project, but the price is actually likely to increase over time, with review dates set for 7.5 years, 15 years, and 25 years after the day that the plant officially begins commercial operations.
According to the NY Times, the two pressurised water reactors planned for construction at Hinkley Point C will cost around £14 billion, begin producing power for the national grid in 2023, and then continue to operate for 35 years. Together they will generate seven percent of the UKs electricity, enough to power 5 million homes.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com