China agrees to invest £6bn for a 33.5 per cent stake of a nuclear power station to be built at Hinkley Point in Somerset. Critics have complained that the project does not represent value for money.
The deal was announced on the second day of the state visit to Britain of Chinese President Xi Jinping.
French energy firm EDF, which will build the new facility at Hinkley, announced that China General Nuclear (CGN) will also help it build two reactors at Sizewell in Suffolk.
In addition, EDF said it had agreed to work with CGN to help it win a license to build a Chinese-designed nuclear power station at Bradwell in Essex. The Bradwell project will be lead by the Chinese, who will take a 66.5 per cent stake.
The Hinkley power station will not be fully operational until 2025, and the government has pledged to guarantee a price of £92.50 per megawatt hour of power that it generates for the next 35 years, which is roughly double the current market price.
The difference between the market price and the guaranteed price would be met by subsidies paid for by energy consumers.
Coming at a time of severe cuts in government support for renewable energy technologies, the plan has drawn heavy criticism.
The Conservative government was so keen to seal this deal that in September, in order to seal Chinese involvement, Chancellor George Osborne signed a £2bn guarantee that would be payable to investors if any of the companies building the Hinkley plant went bust during construction.
The nuclear agreements would be the most significant of a series of deals worth more than £30bn that the government hopes to clinch during President Xi’s visit, and which the government says will create some 3,900 new British jobs.
Aiming to encourage Chinese visitors to keep coming back to the UK, the government also announced new cut-price visas.
Tourism chiefs reacted with delight to the news that from January 2016 the government is to cut the cost of a two-year multiple-visit UK visa for Chinese visitors from £324 to £85.
The number of Chinese tourists to Britain has doubled from 89,000 in 2009 to 185,000 last year, and they spend an average of £2,688 per head during those trips, contributing almost £500m to the UK economy each year.
Downing Street said that the tourism industry has calculated that for every 22 additional Chinese tourists to Britain, a new job is created within the sector.
David Cameron said: “It will mean that the UK has the best offer in Europe for Chinese tourists and will build on our already strong people to people links, strengthening UK-China relations further.”