Davey woos China over nuclear plants

Sunday, September 8, 2013

ED DAVEY, the energy secretary, will travel to Beijing this month to lay the groundwork for a sweeping new partnership that could lead to Chinese-designed nuclear reactors being built in Britain.

The trip is the latest sign of the government's desperation to find backers for its troubled £200bn low-carbon overhaul of the energy industry. Last week Michael Fallon, Davey's No2, signed a memorandum of understanding to co-operate on civil power with Rosatom, the Russian state nuclear monopoly.

Davey's talks with China are aimed at striking a deeper relationship, which could be formalised in a memorandum by the end of the year.

The Department of Energy and Climate Change declined to comment.

Among the priorities for Beijing would be assurances that its state-owned companies would be given access to new development sites, all of which have already been snapped up by other companies. It is also likely to seek Whitehall assistance to shepherd Chinese reactor technology through the arduous regulatory process.

Today only one reactor design is approved for construction in Britain - Areva's European pressurised reactor.

The China tie-up hinges on the outcome of negotiations between the government and EDF, the French giant, over subsidies for two nuclear plants that it wants to build at Hinkley Point in Somerset.

EDF claims it needs a government guarantee that it will be able to sell power for 35 years at roughly twice the current price to recoup the £14bn building cost. Talks have dragged on for more than a year, although the gap between what the government is willing to offer and what the company has said it needs has lessened.

At the same time, EDF is in negotiations with one of Beijing's state giants, China General Nuclear Power Group, to invest at Hinkley.

It is understood that the company is willing to take up to a 50% stake, but only if it is granted some operational control, as opposed to being a passive financial investor.

In the past, ministers objected to that idea but economic realities have shifted their stance.

The government wants up to a dozen new reactors but the "big six" utilities do not have the cash to cover the £80bn-plus price tag themselves. A spokesman for Davey said he would hold "wide-ranging" meetings with Chinese officials, businessmen and academics this week. The talks are aimed at "collectively" addressing the "transition to a low carbon future."

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