The price per megawatt hour of generated electricity at Hinkley Point C could reach £92.50 if EDF does not go ahead with the Sizewell C nuclear power station.

The initial price will be £89.50MW/h and will be linked to inflation via the Consumer Price Index. The market price is currently around £49MW/h. Should the this rise above the agreed strike price, EDF will reimburse the government for anything it receives above the set level.

“This is an excellent deal for Britain and British consumers. For the first time, a nuclear power station in this country will not have been built with money from the British taxpayer,” claimed Ed Davey, secretary of state for energy and climate change.

In the coalition agreement the Liberal Democrats said they would not support subsidised new nuclear power. The party now argues that the strike price does not constitute a subsidy.

“It will increase energy security and resilience from a safe, reliable, home-grown source of electricity. This deal is competitive with other large-scale clean energy and with gas – and while consumers won’t pay anything up front, they’ll share directly in any gains made from the project coming in under budget and from refinancing or equity sales,” said Davey.

The facility will begin generating power in 2023.

In a statement to the press, Prime Minister David Cameron said: “Earlier this month I spoke about our new industrial policy that looks to the future, and about our determination to embrace new technologies and back new industries and energy sources so that they can flourish and help us build a rebalanced economy across the country.

“As part of our plan to help Britain succeed, after months of negotiation, today we have a deal for the first nuclear power station in a generation to be built in Britain. This deal means £16bn of investment coming into the country and the creation of 25,000 jobs, which is brilliant news for the South West and for the country as a whole. As we compete in the tough global race, this underlines the confidence there is in Britain and makes clear that we are very much open for business,” he added.

Full detail of the agreement are available here.