The industry's long-awaited investment agreement for the Hinkley Point C nuclear power plant in the UK has finally been reached. This marks the official entry of Chinese nuclear power companies into the UK nuclear power market.

On the evening of October 21, China General Nuclear Power Group (hereinafter referred to as CGNPC) announced that CGNPC and EDF (EDF, hereinafter referred to as EDF) have officially signed an investment agreement for a new nuclear power project in the UK. The China-Guangdong-led Chinese consortium will France Power co-invested in the construction of the Hinkley Point C nuclear power project (HPC project) in the UK and jointly promoted the two follow-up nuclear power projects of the Sezwell C (SZC project) and the Bradwell B (BRB project).

Among them, Bradwell B project intends to adopt China's independent three-generation nuclear power technology "Hualong No.1". By then, China will realize the first export of nuclear power technology to developed countries.

The investment agreement was signed in London under the witness of Chinese President Xi Jinping and British Prime Minister David Cameron.

According to the investment agreement, France Power and the China-Guangzhou-nuclear-led Chinese consortium will each account for 66.5% and 33.5% of the shares of the Hinkley Point C project. France Power plans to introduce other investors into the project while maintaining a holding of more than 50%.

According to CGN, the construction cost of the first phase of the Hinkley Point C project is expected to reach 18 billion pounds (about 176.385 billion yuan). CGNPC will invest in this project through its UK-based joint venture, General Nuclear Energy International (GNI).

According to the agreement, in the first phase, the project investment will be shared equally by investors. Therefore, the Chinese consortium will contribute about 59.2 billion yuan.

CGNPC said that at present, the main conditions for the further development of the Hinkley Point C project are already in place. These key conditions include: the signing of the UK Nuclear Power Project Investment Agreement; the negotiation between France Power and the UK government, and negotiations with major suppliers.

In addition, France Power and CGNPC also reached an agreement on the details of the Hinkley Point C project shareholder agreement and the broader nuclear power cooperation in the UK. These include the construction of nuclear power plants in Sizewell in Suffolk and Bradwell in Essex. The relevant terms will be completed prior to the completion of the final investment agreement for the Hinkley Point C project.

It is worth mentioning that France Power and CGNPC have reached an agreement on the main issues that will jointly promote the final investment decision of the Bradville B project. China's self-developed three-generation nuclear power technology "Hualong No. 1" will be applied to the Bradville B project after passing the UK general design review. The Bradwell B project will be based on the No. 3 and No. 4 units of the CGN Power Plant of Guangxi Fangcheng Nuclear Power Plant.

Different from the previous two major nuclear power projects, the Bradwell B project will be led by China Guangdong Nuclear Power and France Power, and the two parties will occupy 66.5% and 33.5% of the shares respectively.

The Sezwell C project is going to build two EPR units. During the project development phase, France Power will subscribe for 80% of the shares, and CGNPC will subscribe for 20% of the shares.

CGN said that the signing of the investment agreement laid the foundation for the implementation of the Hinkley Point C project and paved the way for the final investment decision.

With the signing of the investment agreement, the UK government and France Power's contract negotiations on the Hinkley Point C (HPC) project have also reached an agreement, including the power contract for the new nuclear power plant ("CFD" or "CfD"). The contract sets the price of the Hinkley Point C nuclear power plant to £92.50/MWh (MWh), and the Setzair project will set the price to £89.50/MWh after making the final investment decision.

The financial risk of building the Hinkley Point C nuclear power plant is borne by investors, and the project uses gainshare mechanisms. This means that consumers will benefit if construction costs are lower than expected.

In October 2014, after a 12-month investigation, the European Commission approved the contract. The European Commission believes that this contract is in line with the UK's demand for stable, low-carbon energy.

The European Commission has also recently approved the UK's nuclear waste transfer program, which will also apply to the Hinkley Point C project. The plan means that the full cost of future decommissioning and spent fuel management for new nuclear power plants will be included in the electricity price and will be reserved during the operating period.

Jean-Bernard Lévy, chairman of the French power company, said that he plans to make the final investment decision in the next few weeks to promote the smooth construction of the project.

"Entering the UK nuclear power market is a brand new starting point for CGNPC and a major landmark event for China, France and Britain to achieve mutual benefit and win-win results," said He Wei, chairman of China Guangdong Nuclear Power.

Vincent de Rivaz, CEO of EDF, believes that Hinkley Point C and its follow-up projects will provide safe, reliable and low-carbon electricity for the UK's future development. Compared with other energy options, nuclear energy will save consumers more costs and will provide a strong impetus for UK industrial development, employment promotion and talent development.

France Power and CGNPC became partners 30 years ago. The cooperation between the two companies includes the joint construction of two EPR-based nuclear power plants in Taishan, China, which will also be applied to the Hinkley Point C project.

The two EPR technology nuclear power units of the Hinkley Point C project will meet approximately 7% of the UK's electricity consumption. The UK government's program license, design license and nuclear power plant site license have been obtained.

Contracts with key suppliers of the Hinkley Point C project have also reached a definitive agreement involving companies such as Areva and Alstom.

The project strongly encourages British local supply chain manufacturers to participate in the bidding, and more than 60% of the project amount will be invested in the UK.

In addition, the construction of the power station will bring 25,000 jobs. The UK government and the UK power grid have developed measures to ensure that the power supply remains stable before power generation in 2025.

CGNPC said that the finalization of the above investment decisions will depend on the following conditions: completion of the full version of the document based on the primary terms of the investment agreement signed on the same day; finalization of Finnish Power's financing plan; approval of the board of directors; mergers and acquisitions in China and Europe Approval by the authorities and other relevant government departments.

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