UPDATE 2-UK sets nuclear support precedent with $26 bln EDF deal
* UK, EDF sign first European nuclear deal since Fukushima
* Hinkley Point C nuclear plant to operate from 2023
* Power price guaranteed 35 years at double current price
* Chinese firms to take 30-40 percent in project
PARIS/LONDON, Oct 21 (Reuters) - Britain signed a deal with France's EDF to build a 16-billion pound ($26-billion) nuclear plant, becoming the first European country to provide state guarantees to help fund a nuclear project.
The Hinkley Point C project in southwest England, the first new European nuclear plant since the Fukushima crisis, is expected to start producing power from 2023 and will receive a guaranteed electricity "strike" price of 92.50 pounds ($150) per megawatt-hour for 35 years, more than twice the current market rate, EDF and the British government said on Monday.
The deal demonstrates that nuclear power plant developers require government backing for new projects in Europe, where costs for new atomic energy have surged after regulators imposed stricter safety rules following the 2011 Fukushima disaster.
An EDF-led consortium will build two Areva-designed 1,650 megawatt European Pressurised Water Reactors (EPRs) that will produce about seven percent of British electricity, EDF said.
EDF's long-time Chinese partners, China General Nuclear Corporation (CGN) and China National Nuclear Corporation (CNNC), will take a combined stake of 30 to 40 percent in the consortium, while French state-owned nuclear group Areva will take 10 percent.
Discussions are also taking place with a shortlist of other interested parties, which could take up to 15 percent.
China's CGN is building two EPRs in Taishan, China, and the Chinese companies hope that their involvement in the British project will give them the credibility to eventually sell Chinese-designed reactors in Europe.
British finance minister George Osborne said during a visit to China last week that Chinese nuclear firms could hold majority stakes in British plants in future.
"Today we have a deal for the first nuclear power station in a generation to be built in Britain," British Prime Minister David Cameron said in a statement.
EDF said the guaranteed electricity strike price for Hinkley Point could fall to 89.50 pounds if a second nuclear plant at Sizewell, in east England, is built.
The strike price range is roughly double the level of current British wholesale electricity prices, underlining the government's expectation of an increase in prices.
The government said the construction of new nuclear plants will reduce household energy bills by more than 75 pounds per year in 2030 compared with a scenario where no new nuclear reactors were added.
"(The deal) won't touch consumer bills, it won't touch industry bills until ten years' time," said Britain's Energy Secretary Ed Davey in a radio interview on Monday.
Britain needs to replace 20 percent of its ageing and polluting coal and nuclear power plants over the coming decade and securing power supply is a key plank of the Cameron government's energy policy.
Direct market support for new nuclear plants is unprecedented in Europe since utilities started to be privatised about two decades ago, and Britain will be the first country to seek approval from the European Commission's competition department for its "Contracts for Difference" (CfD) scheme under which it would pay generators above-market rates for electricity.
Earlier this month the Commission ruled out including a reference to nuclear power in revised state aid rules, an indication the British request could be difficult.
"If state aid clearance can be secured, the UK's CfD will increasingly be seen as a potential mechanism for enabling finance and private sector investment in low-carbon generation across the continent," said Daniel Grosvenor, head of Deloitte's British nuclear practice.
Monday's deal also includes a clause that would force any future British government to reimburse EDF for its investments if it decided to shut down the Hinkley Point project for reasons other than safety or security.
Following the Fukushima disaster, nations worldwide reassessed their support for nuclear power. Germany decided to phase out nuclear power, Italy scrapped a planned nuclear programme and France has pledged to cut atomic power to 50 percent of its electricity mix from 75 percent today.
Britain's opposition Labour Party, which is ahead in opinion polls going into a 2015 election, said it also supported nuclear power and would scrutinise the details of the deal.
Critics say that by freezing the power price for a nuclear plant for decades ahead, the government is taking huge risks.
"Why would anyone begin to imagine that you know what the price of wholesale electricity will be in be 2058?" said Tom Burke, an environmentalist and former government energy adviser.
EDF plans to make a final investment decision on the project by July 2014, after getting EU approval and after securing financing for the deal.
EDF shares were virtually unchanged on the news but Areva shares - of which only 4 percent trade freely on the bourse - rose more than 6 percent to their highest level in about 18 months.