EDF sees Britain taking £6bn Hinkley stake

British Government Signs A Deal For New Nuclear Power Plant...BRIDGWATER, ENGLAND - NOVEMBER 12: Water pumped out from the Electricite de France SA's (EDF) Hinkley Point B, nuclear power stations sprays up as it meets the Bristol Channel near Bridgwater on November 12, 2013 in Somerset, England. EDF, who last month announced it was to construct a new plant at Hinkley Point after reaching a deal with the U.K. government, said today that energy bills will rise by 3.9 percent on average. (Photo by Matt Cardy/Getty Images)©Getty

Hinkley Point in Somerset

EDF executives say the British government could have to take a stake of up to £6bn in the Hinkley Point nuclear power station to avoid a “disaster” if the Chinese decide to withdraw from the project.

Theresa May, UK prime minister, threw the £18bn project into turmoil soon after taking office when she put it on hold just hours after the French energy company said it would go ahead with the much-delayed scheme.


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Mrs May is understood to be concerned about the wider deal, under which the Chinese would invest in Hinkley Point C in return for winning the right to use their own nuclear technology to build a new station at Bradwell in Essex. The prime minister is thought to be trying to decouple Bradwell from the Hinkley deal to allow more time to consider the security implications for the Essex site, over fears of the potential level of Chinese influence over Britain’s energy supply.

The issue will be prominent when the prime minister meets Xi Jinping, China’s president, in bilateral talks during the G20 meeting at the weekend. Liu Xiaoming, China’s ambassador to the UK, has warned that stalling the nuclear project could jeopardise relations between the two countries.

The UK government has not set out a fallback option if the Chinese refuse to separate the Bradwell project from the overall deal and abandon their proposed investments in Britain. In public, Beijing remains committed to the deal.

However, there has been growing speculation in the nuclear industry that Mrs May is prepared to invest billions of pounds into Hinkley Point if it becomes necessary. “If the Chinese pull out, the UK government itself will raise the money,” said one industry source.

Downing Street and the Department for Business, Energy and Industrial Strategy both refused to comment on whether the government would be prepared to take a stake. But one of Mrs May’s first statements as new leader was to pledge to use infrastructure bonds — or public borrowing — to finance new projects.

One senior EDF figure said: “If the Chinese pull out, there is no way that EDF will be able to pay for the rest itself. We would need the British or someone else to step in.” Another said it would be a “disaster” for the project if the Chinese withdrew, but that the company would “wait and see” what happened before assuming it was dead.

The idea of the UK government taking stakes in new nuclear power stations was raised this week by the new boss of Horizon, the Hitachi-owned consortium that plans to build stations at Wylfa, on Anglesey, and Oldbury-on-Severn, in Gloucestershire.

Duncan Hawthorne, chief executive of Horizon, said Hitachi could seek an equity stake from the British and Japanese governments. Hitachi could even end up merely as a contractor to Whitehall, Mr Hawthorne told the Sunday Times. “I don’t know how far the UK government might be prepared to go but it’s a question of how best to protect the ratepayer,” he said.

Investing directly in new nuclear power stations would mark a strategic shift for the British government but frustration is growing after years of delays to the Hinkley programme as fears rise that the UK is facing energy shortages. “The sooner the government comes to accept that it has to take a strategic investment in energy infrastructure, the better,” said one industry figure.

An industry source said civil servants were instinctively opposed to any direct investment in new nuclear reactors but that Conservative advisers had been more open-minded in recent months.

Barry Gardiner, shadow energy secretary, said that because government borrowing had never been cheaper, it could make sense for Hinkley — and other infrastructure — to be built with new low-interest debt raised by the government.

But Mr Gardiner, who is also chair of the All-Party Parliamentary Chinese in Britain Group, said Mrs May’s decision would have wider consequences for trade relations between the two countries. “In China, face is very important,” he said.

Mr Liu warned this summer that “right now, the China-UK relationship is at a crucial historical juncture . . . I hope the UK will keep its door open to China.”

Any cancellation of the Hinkley deal would be likely to jeopardise other planned Chinese investments in the UK, according to Chinese officials.

Noting that, during the past five years, Chinese companies had invested more in the UK than in Germany, France and Italy combined, Mr Liu said trust and respect needed to be “treasured even more” as the UK made its decision about Hinkley.

But Richard Graham, who chairs the All-Party Parliamentary Group on China, said: “Ambassador Liu would be best focused on working quietly behind the scenes to understand the priorities of our new government and how China can best engage with them rather than trying to negotiate through the media.”

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