Wednesday 14 September 2016 10:27 pm

Prime Minister Theresa May set to power up Hinkley Point

The government is expected to press the button on two new nuclear reactors in Somerset as early as this week.

Yesterday, reports suggested that the government has told France it has approved an £18bn plan by French company EDF to build two nuclear reactors at Hinkley Point in Somerset.

The likely green light for the reactors is subject to some conditions according to Bloomberg. The original proposal included £6bn of Chinese investment but it is thought the UK could seek to drive a tougher bargain with China over the controversial project. The contractors involved – France's EDF and China's CDC – may be asked to accept a lower 'strike price' for the electricity the project will generate.

Prime Minister Theresa May decided to review the new reactors for Hinkley Point C at the end of July, shortly after she came to power, casting doubt on a project approved by her predecessor David Cameron. The unexpected delay came amid concerns about the scale of public subsidy for the plants and whether Chinese involvement constituted a security risk.

A senior government source told City A.M. that May had “wanted more detail and she’s now had that”. They added suggestions of a rift with Chinese president Xi Jinping over the project, which threatened tens of billions' worth of potential investment into the UK, had been overstated.

“The Chinese have been perfectly understanding and have been very patient,” they said.

Last night, Downing Street said that a decision is due this month. However, 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.

The deal had been linked to the Chinese-supported construction of another reactor at Bradwell, but business secretary Greg Clark this week claimed that was no longer the case.

Speaking in parliament late on Tuesday, Clark said the government was specifically reviewing the energy prices guaranteed to EDF for 35 years as part of the deal.

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

The project is of strategic importance for China. CDC intends to take stakes in a similar nuclear reactor at Sizewell, and in another at Bradwell.