Prime minister poised to approve £18bn project but is expected to seek a better deal with China on future electricity prices

Theresa May is expected to confirm on Thursday that she will give the go-ahead for the Hinkley Point C nuclear power plant, but will seek to impose new conditions on its French and Chinese backers.

The prime minister announced a review of the contract to build the Somerset reactor in July, amid concerns about the costs and the potential security impact of Chinese involvement.

May and Greg Clark, the business, energy and industrial strategy secretary, are thought to be hoping to persuade the contractors involved – the French utility company EDF and the Chinese state-backed firm CGN – to renegotiate the contract that specifies a generous minimum price for the electricity the project will generate.

The National Audit Office warned in July that Hinkley Point C could cost energy consumers £30bn in top-up payments because of falling wholesale electricity prices.



Under the terms of the subsidy scheme, the British consumer would compensate EDF for lower wholesale electricity prices over Hinley’s 35-year lifetime, an arrangement that has appeared increasingly poor value as energy costs have plummeted with the declining oil price.

George Osborne, who was sacked as chancellor by May in one of her first acts as prime minister, had been determined to press ahead with Hinkley as part of his attempt to create a “golden decade” of relations with Beijing.

But May’s joint chief of staff, Nick Timothy, had previously expressed doubts about the security implications of allowing China to be involved in such a key piece of national infrastructure and Clark is said by Whitehall insiders to have raised concerns about whether the deal represented value for money.

Downing Street sources insisted on Wednesday that no formal decision had been made, but May’s spokesperson has said an announcement would come in September. Thursday is the last possible day for a statement to parliament before the House of Commons goes into recess so that MPs can attend the autumn party conferences.

Since the summer, No 10 has sought assurances about the security risks of Hinkley and examined the idea of separating the project from a second reactor at Bradwell, in Essex, which the Chinese hope to build independently.

Clark told the House of Commons on Tuesday: “We are looking at all components of the deal and will make our decision before the end of the month,” adding that the government saw “new nuclear” as “an important part of a diverse energy mix that gives resilience to UK consumers”.

Hinkley would be the first new nuclear reactor built in Britain in two decades.

The shadow energy secretary, Barry Gardiner, said he would welcome a decision to give Hinkley the go-ahead, saying: “If the secretary of state has now managed to reduce the cost to British bill payers, in line with my suggestions, I promise not to gloat. I will simply say well done for sticking up for the consumer.

“But in return, the government must stop the dithering. Their delay has put at risk £18bn of investment and jeopardised 25,000 skilled jobs in the nuclear industry, which are essential for the UK’s balanced energy portfolio.”

However, environmentalists are likely to condemn the decision. The Green party co-leader Caroline Lucas said: “Instead of investing in this eye-wateringly expensive white elephant, the government should be doing all it can to support offshore wind, energy efficiency and innovative new technologies such as energy storage.”

May has come under pressure from the Chinese government to approve the project, with Beijing’s ambassador to London warning that it could affect diplomatic relations between the two countries.

Beijing was incensed by suggestions that UK ministers were unhappy about the national security implications of giving a Chinese company access to Britain’s national energy infrastructure.

In a prominent opinion piece published in the state-run China Daily newspaper before May’s arrival for the G20 summit, China’s ambassador to London urged her to make “wise strategic choices” over Britain’s future relationship with Beijing.

Senior military and intelligence figures had warned that plans to give China a big stake in Britain’s nuclear power industry posed a threat to national security. Critics have said the US would never allow China to work inside its national infrastructure, giving it the opportunity to sabotage energy supplies.



The proposed scheme in Somerset to build two reactors capable of providing 7% of Britain’s total electricity needs has been hit by continual delays due to concerns inside EDF about the financial burden to the already heavily indebted energy company. The nominal cost of construction is £18bn, according to EDF.

Beijing only agreed to fund 30% of the project on condition it would be allowed to showcase its nuclear prowess by building a Chinese-designed reactor at Bradwell in Essex. Beijing was therefore incensed by suggestions May might approve Hinkley but reserve judgment on Bradwell.

The Chinese were brought on board as part of Osborne’s effort to forge closer ties with Beijing but also because of doubts about EDF’s ability to carry out the project.

Hinkley is scheduled for completion by 2025, but many regard that timetable as unrealistic because reactors of the same design being built by EDF in Finland and France are running years behind schedule.