|The UK prime minister, David Cameron announce a historic nuclear deal between China and the UK at a Downing Street press conference. Photo credit: Number 10 / Georgina Coupe via Flickr.|
By Anders Lorenzen
In China’s stride to become a world economic superpower, the world’s most populous country is increasingly investing in energy, at home and abroad. At home, investment is driven by the big need and appetite to vein itself of dirty and polluting coal to deal with the critical issue of climate change. This has unfolded into large investments in clean energy and also nuclear energy.
Now the UK has turned to China for help to build their first nuclear reactor for decades, the controversial Hinkley Point C project which is set to be the most expensive energy project ever undertaken in the UK will drastically increase the price Brits will pay for their energy. This comes at a time when the UK government has drastically cut back the subsidies they give to renewable energy technologies and for some technologies like onshore wind, it will be completely removed as of April next year.
The power plant will be operated by the French energy giant EDF who will take two-thirds of the stake, with the last third being taken by the Chinese General Nuclear Corporation (CGN) and on top of that, a loan deal has been signed between the Chinese and UK government worth a staggering £40 billion (bn). But Hinkley Point C is just the beginning with the Chinese state-owned CGN also to take a two-thirds stake in the Bradwell nuclear plant east of London, where it plans to build a Chinese-designed reactor, and a one-fifth stake in a project for Areva-designed reactors at the Sizewell plant in the county of Suffolk on the south-east.
Hinkley Point C would have an operating capacity of 3.2 gigawatts (GW) with UK government sources saying it would generate electricity for six million homes, and would be operational in ten years. A strike price of £92.50/MWh has also been agreed, which is double the price of today’s wholesale electricity price and nearly the double of onshore wind, which in the UK now is the cheapest new energy source with a strike price, without subsidies, of £55/MWh.
The project has not come without controversies. Apart from the safety aspects, serious questions are being asked about the economics of the project and the fact that China would have such a controlled stake in a UK energy project. The most striking facts comes from Bloomberg who reports that for the amount of money the project cost, six times the generation capacity could be built from wind power, had those sums been invested into the renewable energy technology instead. Questions are also being asked about the jobs it would create. Government figures state 25,000 jobs, but it has been pointed out by the CEO of the green group Friends of the Earth UK, Craig Bennett, that it is even less that the 27,000 jobs that are being expected to be lost in the UK solar industry due to subsidy cuts.
But the deal between China and the UK, which was sealed during a high-profile visit to the UK by the Chinese President Xi Jinping last week also focused on other energy or infrastructure forms, such as: deals that included a $10 billion liquefied natural gas (LNG) supply deal between BP and China’s Huadian power producer, a 2.6 billion pound deal with Carnival Corp to make new cruise ships, and a 1.4 billion pound deal between Rolls-Royce and HNA Group.
It is though rumoured that several clean tech and clean energy agreements were signed between the two countries, but it’s not anything the UK government is promoting and is missing from any communications or press releases on the deal.
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