UK new nuclear

The details of the deal to build Britain’s new nuclear reactors at Hinkley Point are becoming clearer: a basic cost of £16bn, a quiet increase of £2bn since the last parliamentary statement on the issue less than six months ago. It guarantees a unit price of £92.50 per megawatt hour for the electricity produced, stretching four decades into the future, and the UK government in effect underwrites the investment. 

Nearly. That was my summary of the state of negotiations between the UK government and EDF on new nuclear last month. Nearly but not quite as comments by Ed Davey over the past week make clear. The government had hoped to make a positive announcement before the summer but it is now looking at the prospect of more months of further talks. A deal, intended by ministers in London to represent a final offer, was put on the table four weeks ago. EDF in Paris, where all the energy company’s decisions are made, has failed to respond.

Frustrated by the unwillingness of EDF to engage, the government, which wanted to do a deal and thought an agreement was possible after the last Anglo-French summit in May, has now effectively stepped back and is talking to other possible suppliers. 

As the FT reported on Friday, negotiations on the terms for new nuclear have advanced and there is increasing optimism that a deal can be done. The meeting between David Cameron and Francois Hollande in Paris two weeks ago amounted to a declaration of agreement in principle. Just three issues remain to be resolved.