Nuclear: Hinkley Point gets planning go-ahead – strike price to follow ‘shortly’

  • Nuclear Davey

    Ed Davey announced that he has granted planning consent for Hinkley Point C.

  • Nuclear

    There are major concerns over the ongoing strike price negotiations for nuclear. Image credit: Topato.

The first of a series of new-build nuclear sites in the UK has received planning permission.

In a statement delivered to the House of Commons, energy and climate change secretary Ed Davey confirmed that the proposed nuclear development at Hinkley Point C has been given the go ahead.

Davey said that the proposed nuclear development would provide a "very significant contribution" to the UK’s low-carbon economy, creating between 20,000 and 25,000 new jobs during its construction.

The site will house two 1,600MW reactors which the Department of Energy and Climate Change (DECC) expects to generate around 7% of the UK’s total electricity demand.

Addressing the Commons, Davey said: “The planning decision to give consent to Hinkley Point follows a rigorous examination from the Planning Inspectorate, and detailed analysis within my Department. I am confident that the planning decision I have made is robust, evidence-based, compatible with the Energy National Policy Statements and is in the best interests of the country. It’s vital to get investment in new infrastructure to get the economy moving. Low carbon energy projects will bring major investment, supporting jobs and driving growth.”

However, no progress will be made on the site yet because EDF has not confirmed whether it will be taking the £15 billion project on. EDF and the UK government are reportedly at loggerheads over the ‘strike price’ that nuclear technology will receive under the Energy Bill, with Davey noting that discussions on the strike price are ongoing and “intense” – although he expects to reach on agreement on the strike price “shortly”.

Nuclear is included as a low-carbon technology in the Energy Bill and, as such, electricity generated by the technology will be guaranteed a minimum price under the Contracts for Difference (CfD) mechanism.   

This month the Energy and Climate Change Committee published a report on new build nuclear which warned that the strike price offered to nuclear should not be offered at a price that is higher than other low carbon sources of energy, such as offshore wind, which is hoped to be around £100/MWh by 2020.

The chair of the committee, Tim Yeo, warned: “Unlike gas-fired power stations, nuclear power stations are expensive to build but cheap to operate. It is right that investors should be given confidence that they will recoup their money by providing them with long-term contracts.

“But at the same time long-term price guarantees for new nuclear power stations need to deliver value for money to consumers. Locking consumers into paying prices for nuclear power that are unacceptably higher than prices paid to renewables or carbon capture and storage projects would be wrong.”

"It is disappointing that there is still so little transparency about the on-going negotiations between the government and developers of new nuclear power stations. 

"Government needs to provide more clarity about exactly what forms of support new nuclear projects will receive and whether consumers, taxpayers or project developers will have to cough up if construction costs end up being higher than anticipated."

During questions raised in the House of Commons, a strike price of £97/MWh was repeatedly mentioned by a number of MPs. Davey refused to be drawn on the potential strike price, stating that he “didn’t recognise the figure” and that ongoing negotiations are commercially sensitive.  

The UK government’s new nuclear strategy includes the provision to deliver 16GW of capacity. Critics of new-build nuclear in the UK have pointed to similar projects in France and Finland which have encountered serious delays and incurred significant additional costs. Today's announcement only covers the planning aspect of the development and does not guarantee the construction of new nuclear at Hinkley Point.

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