Business secretary Greg Clark has said the government will decide “in early Autumn” whether to go ahead with its commitment to pay EDF an index-linked £92.5/MWh for 35 years to build a new nuclear power plant at Hinkley Point.
The announcement follows EDF’s board narrowly voting to build the plant yesterday. EDF’s shares spiked 10% on Friday morning following Clark’s announcement and better than anticipated first half results.
Delaying the decision, following years of negotiations between the French state-owned firm and the UK government, while redesigning the energy market to ensure nuclear could be supported without breaching State Aid rules, has received a mixed reaction.
However, Clark said the government needed to “carefully consider all the component parts” of the deal. He also reiterated that nuclear was “an important part” of the UK’s energy mix.
The deal struck by the government with EDF has been variously described as necessary albeit expensive, to “an abomination that will blow up in the nation’s face“.
Since the deal was negotiated in 2013, the cost to consumers has risen from £6bn to almost £30bn according to the National Audit Office,due to government’s guarantee to make up the difference between the wholesale market price and the guaranteed ‘strike price’ of £92.50. Since then, wholesale power prices have slumped.