The energy secretary on Saturday intervenes in the debate over nuclear power by insisting he will not budge a further inch in his offer of long-term guaranteed fixed prices for nuclear electricity. Ed Davey says he regards the negotiations as a test for his commitment to produce nuclear energy at an affordable price and without subsidy by the taxpayer.

The government is locked in lengthy talks with its preferred supplier, the French energy firm EDF, over a planned nuclear plant at Hinkley Point in Somerset, which would be the first in almost two decades. But Davey says EDF's chief rival, Hitachi, looks willing to make an acceptable offer on price.

In a Guardian interview, he described the negotiations as a personal test since as a past nuclear sceptic he had to prove he could negotiate a price that does not represent a subsidy to the industry. Davey, a key figure in the Liberal Democrats, also argued if he could strike the right deal it would be time for environmentalists, including in his own party, to rethink their approach to nuclear.

Revealing a lull in the EDF talks, he said: "My main job is to make sure that this deal works for the British consumer and for British industry. We have made a hell of a lot of progress in our negotiations but we are not there yet. We are down to one or two issues, including the actual price. I am not going to sign any deal with EDF unless it is value for money, is affordable and meets the coalition agreement of no public subsidy. These are our tests and we are going to meet them. The other side know the strike price I will agree to, and they need to know I am not going to budge an inch. This has got to work for both parties."

He said he had already had talks with EDF's rivals: "Sometimes people said it is EDF or bust. I would like to do a deal with EDF but we don't have to. I was in Korea and Japan recently talking to other investors and vendors. Their interest in the UK market was massive. I got the very strong impression that the sort of price I was happy to agree with EDF, they could match."

He added: "I am determined that the consumer or the taxpayer will not bear the risk of construction over-runs. Nuclear will get no preference in comparison with other low-carbon technologies."

The long-delayed deal – likely to cover the price over the next 35 years – is seen as a litmus test of the affordability of nuclear power not just in the UK but across Europe. The new reactors are vital to hitting the government's long-term carbon-emission goals and maintaining electricity supply at a time of rising public anger at high energy prices, as well as fears of energy shortages.

Davey needs to deliver a deal that balances low electricity for consumers, a secure national low-carbon energy supply and his party's opposition to nuclear power. His party opposed a new generation of nuclear reactors in its election manifesto but in 2010, in concert with its coalition partners, agreed it would let nuclear stations be built so long as the energy was not subsidised.

In his interview Davey insisted he would stick to his party's promise. "This is a real test for me, having made my doubts about nuclear in the past because of the price. Well, I am going to get the right price."

He added measuring public subsidy has to take into account the right comparators, adding "fossil fuels and gas prices are more expensive than they appear in the wholesale market", once the true cost of carbon is taken into account.

He took on the nuclear critics, telling them: "You should worry about climate change. So many environmentalists have changed their views because of the threat of climate change and the fact that nuclear is low-carbon – James Lovelock, Mark Lynas, Professor James Hansen, George Monbiot, Stephen Tindale and the late Bishop Montefiore."

He added: "Fifteen nuclear reactors are closing by 2023 – that is eight gigawatts of power – so much of the new nuclear is replacing old nuclear, mainly on the sites of the old reactors.

Davey last week announced that EDF Electricité de France SA (EDF.FR) would be given guarantees of up to £10bn to underwrite the loans to build the proposed plant at Hinkley Point C, so making the project more attractive to third-party investors and reducing the impact on EDF's balance sheet. He insisted that this did not represent a subsidy since the loan would be at a commercial rate.

The guarantee had been seen as vital to unlocking a deal but Davey said he was waiting for EDF to reflect on his offer on the strike price, adding there was a lull in the talks. It is expected that the guaranteed fixed price for nuclear electricity will be fully linked to inflation, and last 35 years.

Each power station would cost about £14bn to build. They would come onstream in 2020 and 2021, so a deal would not plug the apparent short-term gaps in the UK energy supply highlighted in recent weeks, Davey argued. "Nuclear is not part of the short-term or medium-term security issue, so EDF does not have us over a barrel on this. In fact our hand is a lot stronger than people realise, because we have other low-carbon options. Carbon capture and storage competition is down to two preferred bidders and we will sign agreements shortly, and that competes with nuclear. The fact that we have just got our strike price for renewables also shows we have other options.

"As important, and possibly more important, we have other nuclear options. Hitachi are very live options. They bought Horizon only last year and their pace of progress is truly impressive. They have already had preliminary talks with the regulator on going ahead with an examination of their nuclear reactor design. Their boiling water reactor has been used in Taiwan and Japan. Recently they bought four reactors on time and on budget."

The Japanese manufacturer is planning to build up to six reactors at two sites through the Horizon Nuclear Power venture it agreed to buy in October.

It has been reported that EDF, the world's largest nuclear operator, seeks a strike price of £95-£100 per megawatt hour of electricity, while the government would rather settle around £80-£85. The current wholesale price is about £48/MWh.

Davey simply said the figures that have appeared in the media so far are not ones he recognises. The strike price depends on a number of factors, such as the duration of the contract, the capital cost of the project and the rate of return EDF is allowed to make on it.

Davey is clearly aware that the wrong deal will cause him potentially difficult political problems in the Liberal Democrats, but says the party historically has not been completely anti-nuclear. Davey told the Guardian: "The issue has never been completely black and white in our party. It is fair to say our policy at the last election was anti-nuclear and clearly there is a majority concerned about nuclear, and that is the case in the parliamentary party. I am not going to suggest otherwise. But like all those other environmentalists, many in our party are looking at climate change and have decided that is the chief environmental threat. As a result some have become genuinely pro-nuclear. Some of that is going on in the party, but there are people like me who have always been worried about the price. That is why I hope people can be reassured to know that I will be fighting very hard on that."

The importance of the negotiations to the UK taxpayer can hardly be underestimated. It has been suggested a strike price of around£95 per megawatt hour that was linked to inflation would yield accumulated revenues to EDF of £143.5bn over the 35 years of the contract, compared with £85.75bn if the contract were not linked to inflation.

These calculations are based on an assumption that there will be an eight-year planning and construction period before the 35-year price guarantee kicks in, and annual consumer price inflation of 2% over the period. Inflation stood at 2.7% in May, according to official figures, and has averaged over 2.8% in 2012

Davey is confident that a site for the waste can be located democratically. He said: "In terms of the location of the decommissioning, we need to be clear we already have huge amounts of waste left over now from the first two generations of nuclear reactors and from the military programme. We have to deal with that whether we build one single new nuclear reactor or not. It has to be dealt with. The waste from new nuclear will take up less volume – that would mean a slightly larger geological waste disposal facility than was needed anyway. Do I think we can achieve that? Yes, I do."

He sounds positive despite a vote by Cumbria county council earlier this year to reject underground storage. He points out the West Cumbrian council including Copeland, which houses the Sellafield nuclear site, wanted to give the scheme the go-ahead. He said: "We do want this to be a voluntary democratic process and not to force it on anybody, but we do think the vote of the two borough councils strongly in favour suggests that this approach will work. It is a lot of jobs, community benefit and a lot of economic activity. Other countries are doing this – the US, Finland, France, Canada, Sweden. In fact they are ahead of us in identifying and building these facilities." He is likely to recast the franchise so a go-ahead is needed only from the councils directly affected.

Britain is seeking to spur new reactors as part of a £110bn investment plan to replace ageing power plants and upgrade grids. Davey said he was seeking to create the world's first low-carbon electricity market in the early 2020s, saying no one knew what the mixture would be: clean coal, different forms of renewable or new nuclear. The least-cost pathway to our 2050 climate change target would be a mix of the energies.