French energy giant EDF yesterday approved a contested plan to build Britain's first nuclear power station in decades but the British government said it would wait before taking a final decision.
Britain's business and energy minister Greg Clark said the government would review the nuclear project, shortly after EDF's board backed a project which critics fear could bankrupt the French utility.
"The UK needs a reliable and secure energy supply and the government believes that nuclear energy is an important part of the mix," Clark said. "The government will now consider carefully all the component parts of this project and make its decision in the early autumn."
Before the deal can go ahead it must be approved by Prime Minister Theresa May.
EDF's directors had been deeply divided over the planned construction of two nuclear reactors at Hinkley Point in southwest England for $23.8 billion.
"At its meeting on 28 July 2016, EDF's board of directors made the final investment decision," the company said in a statement.
Ten members of the board voted in favour of the deal, while seven voted against, a source told AFP.
Upping the tension, one board member resigned just before the crunch meeting, saying he disagreed with the plan, reducing the board of directors to 17.
Unions seek delay
The Sizewell B nuclear power plant was the last to go online in Britain, starting generation in 1995.
The plan to build the latest generation EPR reactors, signed in 2013, is to be carried out by EDF with Chinese partner CGN, but has hit several snags since. The reactors are due to go online from 2025.
Weighing on its viability is the decision of French nuclear company Areva to drop out because of financial difficulties and the subsequent takeover of Areva's obligations by EDF at the behest of the French government, which owns 85 per cent of EDF.
This pushed EDF, which was already struggling under a debt mountain of $41.4 billion at the end of last year, to go further into the red, leading some to question the group's ability to juggle all its liabilities, including the renovation of France's nuclear operations and the takeover of Areva's reactors amid falling energy prices.
Unions fear for EDF's financial survival and have asked for a delay of at least three years of any decision on the British nuclear plans, even waging a court battle to stop the momentum.
EDF chief financial officer Thomas Piquemal resigned in March over the threat the project represents to the company's finances, and CEO Jean-Bernard Levy has acknowledged that the company's "financial trajectory is taut".
EPR reactors, developed mostly by France's Areva, are the latest generation of nuclear reactors and among the most powerful in the world, and according to Areva, the safest. There are only two other ongoing EPR reactor projects in Europe, one in Normandy in France and the other in Finland, and both have been plagued by delays and cost overruns.
'Too big to fail'
The French government has been doggedly determined to get Hinkley Point approved as it sees the project as crucial for the long-term viability of France's nuclear industry, which employs 220,000 people.
Previous British governments have also been in favour because the reactors will cover up to seven per cent of Britain's electricity needs while helping the government meet its CO2 emissions targets because of relatively low carbon emissions from nuclear energy. But British support is not unanimous, and criticism focuses on the growing difference between an electricity price guarantee for EDF, subsidised by the British taxpayer, and current falling energy prices.
EDF would be guaranteed £92.50 per megawatt hour produced by Hinkley Point over 35 years, giving it an estimated nine percent of return on its capital. But Britain's National Audit Office has warned that the potential cost of this subsidy had risen to £29.7 billion from a 2013 estimate of £6.1 billion because of the drop in energy prices.
There have also been environmental concerns. Greenpeace executive director John Sauven said the power station was "terrible value for money".
The EDF decision "just shows the Hinkley deal became too big to fail in the eyes of British and French politicians," he said.