Hinkley Point nuclear agreement expected in March
Lucy Hornby in Beijing, FT 15th Jan 2015
French nuclear power developer EDF said it expected to sign a long-awaited investment agreement with its Chinese partners for a new reactor at Hinkley Point in southwest England by the end of March, helping pin down procurement for the £24.5bn project.
The plant would be the first overseas venture for China General Nuclear Power Corp, which has negotiated for Chinese companies to get a share in supplying components to the project. EDF and the British government had initially envisioned the Chinese partners would primarily help with providing financing.
"In principle, everyone's on board,” said Song Xudan, chief executive for EDF in China. "But these are huge contracts and we have to go through them line by line.”
The UK government had pushed for a final commitment from EDF last year after the EU approved incentives in the form of guaranteed power prices. The company and the British government still have to sign the final details of the contract for difference, or price at which the power will be sold, and an infrastructure investment guarantee.
EDF, which is one of the UK 's big six energy suppliers, has stated it wants to reach an agreement on the plant's ownership in the first quarter of 2015. If talks slip into April, final agreement could be delayed by government business winding down ahead of May's general election.
The Hinkley Point reactor would be a valuable showcase in China's drive to export nuclear construction services around the world and, ultimately, a Chinese-developed reactor. CGN's rival China National Nuclear Corp, which is also due to invest in the Hinkley Point project, is building a reactor in Pakistan. Beijing is also negotiating to build four reactors in Turkey .
One-third of the nuclear reactors under construction in the world are in China , giving Chinese contractors experience and economies of scale. The country has 23 operational reactors and another 25 under construction as it strives for 58GW of nuclear power capacity by 2020.
Hinkley Point was designed to benefit from experience gained in building similar EPR reactors in Finland, France and China. But delays in completing the first three have disrupted that sequence, and design changes sought by the British government mean the plant will not be identical to those overseas.
The EPR is not the only design to experience delays and cost over-runs. The first reactors debuting the AP1000 design from Westinghouse, owned by Toshiba of Japan, are now likely to come online in 2016, three years behind schedule, Chinese officials say.
Areva, the French group which is providing the EPR reactors, will have a 10 per cent stake in the Hinkley Point project. State-controlled Saudi Electric is one of a handful of possible minority investors.
The UK government agreed in October 2013 that Areva, CGN and CNNC would all invest in Hinkley Point.
However, it is thought that the Chinese companies have also been pushing for a substantial share of the supply contracts, a demand that has complicated the negotiations. They also want ownership of another nuclear site, at Bradwell in Essex, with the aim of building their own reactor. Discussions over that have been a stumbling block in the Hinkley Point negotiations.