China General Nuclear Corporation (CGNPC) and China National Nuclear Corporation (CNNC) recently announced their intentions to construct a prototype nuclear reactor at the Bradwell development site in Essex, UK. EDF, the French firm that owns Bradwell, has faced pressure from China to sell its rights to the Bradwell nuclear development site, in order to get support from China in the financing of the larger Hinckley Point and Sizewell nuclear projects also underway in the UK. China is insisting EDF include the sale of its rights to the Bradwell nuclear development site in return for financial support for the company‘s projects. CNNC and CGNPC hold a combined 40% stake in Hinckley Point.
Hinckley Point is already on track to become the world‘s most expensive power station and EDF has gone three times over budget on a similar reactor in France. CNNC and CGNPC want to use the prototype reactor at Bradwell as a proof of concept that would help them secure additional nuclear contracts around the world. Few details have been released as to the technical aspects of the Chinese reactor, but the design is expected to produce one gigawatt of electricity. If completed, the prototype reactor at Bradwell would be the first Chinese designed and operated reactor in the west.
The British government must still approve the deal before it can be finalized, though there are indications that Prime Minister Cameron is pushing for its approval. Signing of the agreement is expected in October during a state visit by Chinese President Xi Jinping. EDF has already postponed the opening of Hinckley Point until 2024 and Cameron reportedly wants desperately to speed up the project. It is unlikely that the British government will kill the Bradwell agreement in light of the necessity of Chinese financing for the continuation of Hinckley Point. The project is already losing popularity, as estimated electrical rates from the plant are expected to begin at $147.50 per megawatt hour, more than double current rates. Further cost increases will be born on the backs of the British taxpayers as the project is heavily subsidized by the government.
Additionally, Chinese financing terms could place further burdens on British tax payers as they become the testing site for Chinese technologies. This agreement will provide CNNC and CGNPC the opportunity to further strengthen their stake in the global nuclear market. Just as important is the increasing stake Chinese companies will have in Britain‘s domestic nuclear market, especially as the country looks to move away from carbon based energy sources. China recognizes Britain and EDF‘s desperation for financing and will use this to its advantage in all negotiations, giving Beijing the leverage to increase its stake in nuclear projects and increase the use of its equipment and materials.