Electricité de France SA (ECIFF.PK) Monday announced a comprehensive set of agreements with the UK Government for the proposed nuclear power station at Hinkley Point C. This deal would see the French power giant build and operate a pair of nuclear reactors on the west coast of England.
The total costs to first operation is expected to be about 16 billion pounds, or about $26 billion, and will take 10 years to build. EDF Group will partner with Areva SA, or AREVA, and two Chinese nuclear companies China General Nuclear Corp., or CGN, and China National Nuclear Corp., or CNNC in the project.
EDF group's share of equity is expected to be 45 to 50 percent, and AREVA's to be 10 percent. The Chinese companies will have 30 to 40 percent share.
AREVA, which is the worldwide leader of the nuclear supply industry, is a long-standing partner of the EDF Group and both has been working with CGN and CNNC for 30 years in the construction and operation of nuclear power plants.
As per the investment contract agreement, the power station is expected to provide the UK with low carbon electricity at a fair price for consumers as well as create more jobs. The company said the project will benefit from the Government's Infrastructure Guarantee Scheme under terms and conditions to be agreed upon.
Pursuant to the agreement, Hinkley Point C will offer stable and predictable prices through a 'Contract for Difference.' Under this, the consumers will not pay extra, if the wholesale prices rise above an agreed 'strike price.'
If it falls below this mentioned price, the generator will receive a top-up payment, and customer pay nothing until the power station is operational.
"The agreement in principle reached today with the British government significantly strengthens the industrial and energy co-operation between France and the United Kingdom. The EPR project at Hinkley Point represents a great opportunity for the French nuclear industry in a context of a renewal of competencies." EDF Group Chairman and CEO Henri Proglio said.
According to the firm, the most important suppliers to the project now been finalized, subject to a final investment decision, are Bouygues TP/Laing O'Rourke, Costain, Alstom and Areva. The company has to finalize agreements with industrial partners for equity funding, before a final investment decision is made.
The agreement also confirmed that the project will benefit from the Government's Infrastructure Guarantee under terms and conditions to be agreed upon.
In Paris, EDF shares are currently trading at 25.68 euros, down 0.08 percent.
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