Électricité de France Nears U.K. Nuclear Deal
Hinkley Point Project Seen as Litmus Test for European Nuclear Sector
The U.K. government and Electricité de France SA EDF.FR -0.53% are nearing a £14 billion ($22.4 billion) deal that would see the French power giant build and operate a pair of nuclear reactors on the west coast of England, a person familiar with the matter said Friday.
Although some final details must be hammered out, the two parties are willing to clinch a deal, and a contract for a first reactor could be announced as early as this month, the person said. "It's going to happen finally, both sides want this to happen," the person said. Talks between the U.K. and EDF are seen as a litmus test over whether the nuclear industry has a future in Europe at a time of lower gas prices and sluggish economic growth. The U.K. government has supported EDF's project to build two nuclear reactors at Hinkley Point in the county of Somerset, saying the country must modernize its power-generation capacity while curbing its carbon emissions. Negotiations have dragged out over the issue of the "strike price", or the guaranteed price at which EDF would sell the electricity generated by the new nuclear plant. EDF has been asking for a price of about £95 per megawatt while the British government rather sought a price between £80 to £85 a megawatt, according to people familiar with the matter. "Negotiations remain ongoing," said a spokesman for the British Department of Energy and Climate Change. "No agreement has as yet been reached." A contract will only be offered if it is value for money, fair and affordable, in line with government policy on no public subsidy for new nuclear and consistent with state aid rules, the spokesman said.