EY UK Energy blog

Hinkley Point deal delivers benefits to all

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Posted: Wednesday, 23 October 2013 at 4.30pm

I was pleased to finally hear that the UK Government has reached an agreement with EDF and Chinese investors to go ahead with the construction of Hinkley Point C. This is a move that will have a lasting positive impact on the UK’s energy independence and low carbon plans and a huge step towards delivering a balanced, lower carbon, energy mix for future generations of UK energy users.

The UK is now materially closer to being able to deliver its first new nuclear station in 25 years. This investment will have a lasting positive impact on the UK's energy independence, its economy, the local communities and the UK's low carbon aspirations. This is a really important stage in the development of the UK’s energy infrastructure. We are coming to the point where a lot of our generating infrastructure was coming to the end of its life. It is an important part of the generation mix for the UK.

Furthermore, this deal gives us confidence. Confidence in the UK to invest the capital needed or to re-shape the way we use energy. Confidence that we are working towards a fuel mix and infrastructure that will enable long-term security of supply.

Agreement on the price and duration of the CfD contract is one of the most significant enablers to unlock positive investment decisions, not just from EDF at their Hinkley site, but other potential co-investors, and subsequently from other developers, such as Horizon and NuGen. Whilst not the final piece of the jigsaw, this is undoubtedly one of the most significant.

With as many as 20,000 people working at the power station site over the course of its construction, and electricity supplies secured for 2.5 million homes, new nuclear projects such as this one are vital in terms of meeting the £200bn of investment needed in the sector to secure our energy future.

Looking forward, a significant construction programme of new nuclear stations in the UK could boost GDP by up to 0.34% a year and nuclear exports from £700mn up to £1.6bn.

I wouldn't be surprised if this deal is only the first of many to come and if we see more providers coming to invest in the UK in the not so distant future.

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