Britain opened the door to Chinese investors taking majority stakes in future nuclear plants on Thursday as Chancellor George Osborne signed a deal aimed at helping find the billions of pounds needed to replace the country's ageing reactors. On a visit to China, Osborne said the two countries had signed a memorandum of understanding (MOU) on nuclear cooperation that included roles for British companies in China's nuclear sector, which is the fastest growing in the world. "While any initial Chinese stake in a nuclear power project is likely to be a minority stake, over time stakes in subsequent new power stations could be majority stakes," a statement from the UK Treasury said. Chinese nuclear companies have expressed an interest in building in Britain, but until Thursday's announcement it was unclear whether the British government would welcome China's participation. The government said this week it was "extremely close" to a deal with French energy company EDF related to building Britain's first new nuclear power station since 1995, a project which is likely to involve China General Nuclear Power Group (CGNPG). That deal centres on a 35-year contract guaranteeing EDF and its potential partners an electricity price for the power from the new plant of £92.5 per megawatt hour, roughly double the current wholesale price, the Wall Street Journal reported. A spokesman for the UK's Department of Energy and Climate Change said the talks were ongoing.
Osborne's statement did not refer to the EDF project but his announcement was made at the Taishan nuclear power plant in southern China, which is a collaboration between EDF and CGNPG.
Britain aims to renew ageing nuclear power plants that are going out of service but it needs foreign investment to pay the huge upfront costs involved.
Britain's shrinking power capacity could lead to blackouts during the winter of next year, a report prepared for an advisory body to the prime minister warned on Thursday.
Energy Secretary Ed Davey said on Sunday he expected nuclear investments from South Korea as well as China, Japan and France.
Last year, Japan's Hitachi bought a new nuclear joint venture company from Germany's RWE and E.ON, underlining interest from Asian firms in entering Britain's nuclear industry.
Last month, Britain also signed a cooperation agreement with Russian nuclear conglomerate Rosatom.
Britain has shortlisted eight sites that can house new nuclear plants, two of which are owned by Hitachi, one by a joint venture between GDF Suez and Iberdrola and the remainder by EDF.
The Westinghouse unit of Japan's Toshiba is in talks to purchase Iberdrola's stake.
Investment from China would similarly involve Chinese companies buying stakes in projects or partnering with the existing owners.
"Investment from Chinese companies in the UK electricity market is welcome, providing they can meet our stringent regulatory and safety requirements," Energy Secretary Ed Davey said in Thursday's statement.
China has 17 nuclear reactors in operation, accounting for about 1 percent of electricity production capacity. Another 28 nuclear plants are under construction.
Osborne is in China on a trade mission that this week saw Britain take a step closer to becoming the main offshore hub for trading in China's currency and bonds by offering less stringent rules for Chinese banks setting up in London.