Hinkley Point nuclear plant faces new delays

Plans for a £14bn nuclear power station at Hinkley Point in Somerset could be delayed by the EU for another 12 months, Whitehall and industry insiders have warned.

The Chancellor, George Osborne, seemingly made a major breakthrough yesterday, when he announced a civil nuclear co-operation agreement with the Chinese. This will allow the Chinese General Nuclear Power Group to take a large minority stake in EDF's Hinkley project and later look at building further stations as part of the Coalition's ambitious nuclear new build programme.

This agreement is a vital step in finalising a long-delayed deal between EDF and ministers over the minimum amount of money the taxpayer will have to stump up for electricity generated at Hinkley. This guarantee is the only way EDF investors would back the billions the French energy giant must spend on the project, as then they will be sure of a healthy return. The Energy minister Michael Fallon said yesterday there are "still some things we're arguing about" with EDF, but promised a deal is "very close". EDF's chief executive Vincent de Rivaz had hoped to sign off on what is known as the "strike price" last year. But the EU will then scrutinise the terms of this agreement under state aid rules. A source close to the negotiations told The Independent this is "not a slam dunk" and could take nine to 12 months to complete.

The source added that the political row over spiralling energy costs, which has seen the Labour leader Ed Miliband vow to freeze bills, meant EU officials taking an even closer look at the Hinkley deal. "It's a difficult one to call," the source added.

A Government source warned that the Austrians and Germans could prove to be particular obstacles to a smooth approval. Chancellor Angela Merkel has been switching Germany from nuclear to renewable power since the Fukushima disaster in Japan in 2011, while in July Austria banned all imports of nuclear power.

Mr Osborne is currently in China to improve commercial ties.