The British government has hailed a "new era of UK nuclear power" after it ended years of uncertainty to give final approval to the pounds 18bn Hinkley Point C plant in Somerset.
French energy giant EDF is poised to sign contracts within "a matter of days" confirming the controversial subsidy deal for Hinkley with the Government and including a pounds 6bn investment in the project by Chinese state nuclear group CGN.
As part of the deal CGN will also invest in the development of a second EDF project at Sizewell C in Suffolk and will now begin developing its own reactor design at Bradwell in Essex with EDF's support, marking the first foothold for Chinese nuclear technology in a major Western economy.
The two reactors of Hinkley Point C are scheduled to produce first power in 2025, generating up to 7pc of the UK's electricity needs, and will be the country's first new nuclear plant since Sizewell B was completed in 1995.
Greg Clark, the business and energy secretary, said Hinkley would be the "first of a wave of new nuclear plants" in Britain while Jean-Bernard Levy, chairman of EDF, said it marked "the relaunch of nuclear in Europe".
The board of EDF narrowly voted to approve its investment in Hinkley in July and had expected to get Government approval then, only for Theresa May to announce a surprise review of the project. But Mrs May's Government yesterday dismissed criticism over the high cost of Hinkley and security concerns over China's involvement to confirm that the project could proceed.
A "revised agreement" will give the UK new powers to veto EDF selling its controlling stake in Hinkley but will not change other elements of the deal.
The subsidy deal, first agreed in 2013, remains unchanged, with Hinkley guaranteed pounds 92.50 for every megawatt-hour unit of electricity it produces for 35 years - roughly double the current wholesale price of power. The guaranteed price was set in 2012 money and indexed to inflation, meaning it is already close to pounds 100/MWh. The Government yesterday said it estimated the subsidy cost for a typical household would be pounds 12 a year by 2030, in 2012 money. The National Audit Office has said the lifetime subsidies could total pounds 30bn. Manufacturers' organisation EEF said it "remains to be seen whether this deal is able to offer value for money" while Labour criticised the Government for failing to "get a better deal for bill payers".
Mr Clark said the subsidy cost "compares broadly with the costs of other clean energy, whether offshore wind with additional costs of intermittency, or gas with carbon capture and storage". The Government also announced there would be "significant new safeguards for future foreign investment in critical infrastructure", including the Government taking a special share in all new nuclear projects after Hinkley, giving it powers to veto ownership changes. It had originally planned to take a special share in Hinkley but this plan was later dropped, as The Daily Telegraph revealed in July.
Rival nuclear developers NuGen and Horizon both welcomed the go-ahead for Hinkley, with Hitachi-owned Horizon saying it was "entirely comfortable" with the new special share plan.
Tom Samson, chief executive of Franco-Japanese venture NuGen, said Hinkley was "the start of the nuclear new build renaissance in the UK". However, Mr Samson, who is seeking to secure Korean investment for the NuGen site in Cumbria, hinted at concern over the new special share plan, saying he wanted to "understand more about the proposal" and its implications.
Hinkley Point C has suffered years of delays and setbacks since it was first envisaged by EDF almost a decade ago, at which point it was slated to start operating by 2017 and estimated to cost less than pounds 10bn. Vincent de Rivaz, chief executive of EDF Energy, its UK arm, said he was confident Hinkley would be online by 2025, the date set in October 2015 when the Chinese investment was secured.