The European Commission has approved the UK Government's support to build and operate EDF Energy's Hinkley nuclear project.

Hinkley will generate a stable source of clean power to nearly 6 million homes once it is up and running, and will provide 25,000 jobs during construction. UK companies could benefit from getting more than 50% of the work, and thousands of jobs are expected to go to local people.

The State aid case included both the proposed Contract for Difference, which provides the developer with an increased price certainty for the electricity generated by the plant, and the proposed UK Guarantee for the project, which will help unlock debt finance.

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Last October's agreement in principle with EDF, the developer, remains in place, and there has been further agreement to strengthen arrangements for benefits to be shared with consumers if the project comes in under budget, or if the project's return exceeds a certain level.

The Government and EDF are continuing to work together to finalise the Hinkley project, including the full terms of the Contract for Difference and the financing arrangements for the project, which includes support from the UK Guarantee. UK Guarantees are designed to facilitate the development of infrastructure that would otherwise find it difficult to obtain finance due to the current state of capital markets.

Energy and Climate Change Secretary Ed Davey said: "This is an important next step on the road to Britain's first new nuclear power station in a generation. While there is much work still to do before a final contract can be signed, today's announcement is a boost to our efforts to ensure Britain has secure, affordable low carbon electricity in the 2020s."

(CD)