Britain is to conduct a new review into a project led by French energy company EDF to build two new nuclear reactors, which would be the country's first new nuclear plant in decades.
EDF's board narrowly voted to proceed with the Hinkley Point C project on Thursday but in a surprise move, British prime minister Theresa May said the government wanted to give the project further consideration.
"The UK needs a reliable and secure energy supply and the government believes that nuclear energy is an important part of the mix," business and energy secretary Greg Clark said in a statement shortly after EDF gave its go-ahead to the project.
“The government will now consider carefully all the component parts of this project and make its decision in the early autumn.”
A spokeswoman for the department for business, energy and industrial strategy said it was “only right” the new government looks at all the details of the project before making a decision.
The £18bn (€21.5m) nuclear reactors carry commercial risks for both France and Britain. EDF will assume the up-front costs, which unions say could jeopardise the firm's survival, while Britain has committed to pay a price twice current market levels for the power generated by the plant.
EDF, whose shares were up 10 percent on Friday, said it was confident about the new British government’s commitment to the project.
“The statement made by Mr Clark is perfectly clear. I have no doubt about the support of the British government led by Mrs May,” EDF chief executive Jean-Bernard Levy said on an earnings call.
Asked about the possible impact of the review on the project’s construction schedule, Levy said that the timing for Hinkley Point was under permanent review, depending on events, notably the effective date of signature of the contracts.
Opponents of the project in Britain say the price at which the government has agreed to buy power from EDF for 35 years, at more than twice current market levels, is too high.
The government signed a 35-year electricity price guarantee contract, known as a “contract for difference”, with EDF in October 2013, under which the utility will receive a top-up fee if power prices are below 92.50 pounds per megawatt-hour (MWh).
The agreement means that Britain will pay the difference for electricity generated from the plant if market prices are below that level.
Current baseload power prices in Britain are under 40 pounds per megawatt hour.
Some industry experts say agreed price levels for a new nuclear plant are generally lower than those for renewable energy.
"Although some may think that the strike (agreed) price is high, it isn't when you compare it with the cost of offshore wind, solar or other forms of renewable energy," Sue Ion, fellow of the royal academy of engineering, said.
Reuters