Business

Why the chancellor wants China to invest in UK nuclear

  • 17 October 2013
  • From the section Business
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Part of what has been holding back the development of new nuclear power plants in the UK is their enormous cost.

The government is refusing to finance these hugely pricey projects directly - although it will allow the owners of any new nuclear generators to charge well above the current market price for any power they produce in years and decades to come, so that the billions in development and construction costs can be recouped.

The big attraction for the chancellor of allowing Chinese companies to invest in Britain's nuclear industry is that they have deep pockets.

On his current trip to China, he has told the biggest Chinese nuclear companies they will in future even be able to own controlling stakes in British power stations, and not just small minority shares.

When you think about the history of nuclear power, it may be shocking to some that businesses and investors from Britain - whose scientists and engineers were pioneers in this technology in the early days - will not own the new generation of nuclear power plants, and they may instead belong to China's nuclear power giants (as well as to the French and Japanese).

The first of these deals with Chinese interests is expected to come next week, when the formal go ahead is expected for the construction of a new £14bn plant at the Hinkley C site in Somerset.

This project will be led by the French state-controlled giant, EdF, which has been looking for a partner or partners to share the costs.

I am told that EdF has been negotiating with three nuclear giants, CGN, CNNC and SNPTC. One or two of these is likely to end up owning perhaps 30% of Hinkley C.

George Osborne has met the bosses of all three of these companies, to give them comfort that he is keen for them to invest in British nuclear in general, and in Hinkley C in particular.

Hinkley C's technology will be French, that of Areva. And the capital, the money, will be French, and - it now turns out - probably Chinese too.