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New nuclear comes at a price

The government's price-fixing deal for the new Hinkley Point nuclear power station looks at odds with its criticism of price rises by the big six energy suppliers.
New nuclear comes at a price

The deal to build the UK's first new nuclear power station since 1995 brings a sharp new focus to the energy price debate. On the one hand, politicians are browbeating the big six energy suppliers for raising energy prices, while on the other they are standing atop plans for Chinese nuclear power stations applauding a deal that locks the government into paying double the current electricity price.

The deal that will see French utility EDF and its Chinese partners - China National Nuclear Corporation and China General Nuclear Power Corporation - build a new nuclear power plant at Hinkley Point in Somerset guarantees them a price of £92.50, indexed to inflation, for every megawatt hour of electricity generated during the 35-year contract. This is roughly double the current price and the gap will be made up through subsidies; for that, read levies on customers' energy bills.

The deal does, at least, include a clause that will see EDF, rather than taxpayers, cough up for any cost overruns on the £16bn project. That is reassuring given that recent new nuclear projects overseas, including EDF's own in France, have been hit by soaring costs and delays. Perhaps that is why private companies were not exactly queuing up to take part in the Hinkley Point project.

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