The UK Government and EDF Group have today reached an agreement on the terms of the proposed investment contract for the Hinkley Point C nuclear power plant in Somerset.

This will be the first nuclear power plant to be in built in the UK for 20 years, following Sizewell B, which started generating electricity in 1995.

Secretary of State for Energy, Edward Davey said of the agreement:

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.  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.  We are creating one of the most attractive electricity investment markets in the world – and this is a clear sign that investors are already responding, even before our electricity market reforms become law.

So here are the facts:

  • When operational Hinkley Point C will provide 7% of the UK’s electricity – enough to power over 5 million homes
  • The project will contribute £100m annually to the local economy during the peak construction period or £2bn in the project's lifetime
  • 25,000 new employment opportunities will be provided during the construction period, due to be completed in 2023, with 900 permanent jobs thereafter over the 60 years of expected operation
  • Electricity generated will be a clean, home-grown source, which will reduce the UK’s emissions by 9 million tonnes of CO2 per year, helping to meet climate targets
  • A "Strike Price" of £89.50/MWh fully indexed to the Consumer Price Index has been agreed. This price benefits from an upfront reduction of £3/MWh built in on the assumption that EDF will be able to share the first of a kind costs of the EPR reactors across the Hinkley Point C and Sizewell C sites. If EDF does not take a final investment decision on Sizewell C, the Strike Price for Hinkley will be £92.50/MWh

The announcement, however, is not legally binding and it will be in 2014 that EDF makes a final decision on the investment in the project. The plans will also require state aid clearance from the European Commission.