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Paris - As two French energy giants clinch a deal to build Britain's first new nuclear plant for a generation, debate has been reignited over nuclear's cost to taxpayers and the legacy of delays at similar projects.
EDF agreed to construct two nuclear reactors at Hinkley Point C in southwestern England in a deal announced Monday worth 16bn ($26bn, €18.9bn), alongside French nuclear group Areva and Chinese nuclear firms CGNPC and CNNC.
EDF claims the colossal price tag is necessary to cover construction costs for the reactors, and additional outgoings such as land purchases, nuclear waste processing equipment and staffing.
Areva has said it will draw from previous experience building the specific type of reactor, including in Flamanville, northwestern France, where the cost of a single EDF-constructed European Pressurised Reactor (EPR) has tripled after four years delay to €8.5bn.
Luc Oursel, chief executive of Areva, said that the latest EPR project would "benefit from the experience gained from the EPR reactors under construction in Finland, France and China."
And while EDF said it would seek to make savings on its British venture after its experience in Normandy, it admitted that they would likely be cancelled out by the costs of breaking ground at the UK site.
"In Flamanville, we constructed an EPR on a site that was already prepared, but that isn't the case for Hinkley Point C, where we are starting from scratch," said Vincent de Rivaz, head of EDF's British unit.
With EDF 84 percent and Areva 87% state-owned, the French government also has a large stake in the success of the project.Government and price guarantees
EDF will benefit from British state-guaranteed loans at favourable rates and an agreed price for the electricity provided set at 92.50 per megawatt hour, or around double the prevailing rate in Britain.
Greenpeace has said the price is "very expensive" and a burden on British taxpayers for "a dangerous and uncertain" form of energy.
The Finnish project using the same EPR is also seven years late, they also said.
Prime Minister David Cameron said on Monday the deal "marks the next generation of nuclear power in Britain, which has an important part to play in contributing to our future energy needs and our longer-term security of supply."
Ed Davey, Energy Secretary, said the plant would keep energy bills down in future.
At full capacity, the two new reactors will be able to produce seven percent of Britain's electricity, enough to power five million homes.
The guaranteed price for energy will in fact take the form of a "contract for difference", a mechanism that will ensure EDF can only profit to a certain, pre-arranged rate.
EDF is anticipating a 10% rate of return on its investment in Hinkley, but will see its profits capped once the agreed price is reached, even if energy prices soar.
Equally, if EDF and its partners exceed the cost construction agreed, they will pay the extra, not the British government and its taxpayers.
Hinkley Point C is unlikely to be functional before 2023, so prices will likely be guaranteed until around 2050 at least.
The deal comes at a contentious time for the industry in Britain.
An outcry against energy prices has broken out in the last week as the largest domestic provider, British Gas, and others such as Npower announced electricity and gas rate increases.
Labour opposition leader Ed Miliband even offered to freeze gas and electricity prices for 20 months if his party won the next general election in 2015.
