British Chancellor George Osborne's announcement in China of a 2 billion pound guarantee for the Hinkley Point nuclear project is seen as further political support for the project and a boost for its final investment decision, experts say.
"The guarantee is a signal sent out by the British government that Britain is still committed to nuclear energy, and this would help to give confidence to the French and Chinese investors, said Andrew Shepherd, senior power and renewables analyst at BMI Research.
"For a large project like Hinkley, to have a guarantee for some of the early stage investment is helpful for investors, as it reduces the level of risk they have to bear," Shepherd said.
The project, led by France's EDF Energy, has previously announced delays because of a funding gap that exists after the French company Areva withdrew its 15 percent investment after the company encountered financial difficulties.
The 24.5 billion pound Hinkley Point nuclear plant will have investment from two Chinese nuclear companies, China General Nuclear Power Group and China National Nuclear Corp. The two parties are expected to announce the final investment decision soon, although no precise time has been announced.
Nuclear cooperation is a big part of Osborne's China visit, as he has previously expressed the UK nuclear industry's intention to work more closely with Chinese partners.
The guarantee is a promise by the British government to give the Chinese and French partners 2 billion pounds of their capital back if the project falls apart after the initial investment stage. In practical terms, it means if developers went bust, the taxpayer would step in and repay a 2 billion loan to any commercial lenders.
It is a way of appealing to private backers and persuading them to support the project developers. It remains highly questionable as to whether EDF and its partners could raise the necessary financing to support the project without the guarantees.
Vincent de Rivaz, chief executive of EDF Energy, said that the Chancellor's announcement of the infrastructure guarantee is a clear sign of the government's commitment to Hinkley Point.
"The government's determination to bring about a renewal of infrastructure and to attract inward investment to the UK are demonstrated by this good news. It is further progress towards a final investment decision on a project which will provide reliable, affordable low carbon electricity for decades," de Rivaz said.
"We welcome the government's support for the industrial participation by EDF and its Chinese partners," de Rivaz said.
Shepherd said that the initial 2 billion pound loan guarantee will probably be the first of several, assuming the project proceeds. The Government has received EU state aid clearance to guarantee up to 16 billion pounds for the project via Infrastructure UK, a government agency.
"This 2 billion could get the project off the ground, but in terms of the overall costs of the project the amount in absolute terms is still small," said Shepherd.
Christopher Bovis, a business law professor at the University of Hull, said that the extra 2 billion pounds "is extremely crucial for the viability of the project."
This support will assist in attracting financing packages to the capital expenditure of the project, as well as helping building the environment of diversification of investment for energy infrastructure.
"It is timely and suits the Chinese investors very well to assess their opportunities for Hinkey Point and also other nuclear infrastructure investment and build opportunities," Bovis said.
"The support, most probably, has clear European state aid requirements and will be seen as a fundamental injection of confidence to the EDF and its stakeholder partners who are involved in financing and delivering the project," he said.
Meanwhile, Amber Rudd, the UK's Secretary of State for Energy, told the Financial Times during a visit to Beijing that Britain is keen to cooperate with Chinese partners for a separate nuclear project using Chinese indigenous nuclear technology, at Bradwell nuclear power station, in Essex.
"They very much want to have their design up and running in the UK. That's because we have such tough standards of regulation, everyone can have confidence they are safe and show that they have a great operation to take elsewhere," Rudd said.
Shepherd said that Rudd's announcement is very positive for the Chinese, as Chinese nuclear firms want to export their technology, and building a project in the UK will be a good opportunity for it to demonstrate that its technology can be used safely and can then be exported to other countries.
Keith Burnett, vice-chancellor of the University of Sheffield, who is a member of Osborne's China visit delegation, said that he is very optimistic about UK China nuclear cooperation, both at Hinkley and other nuclear projects.
"A new generation of nuclear power capabilities will require expensive, long-term investment. Our Chinese partners are dynamic, eager to increase economic value, and have a great appetite for risk, making them ideal partners in the development of long-lasting UK energy infrastructure," Burnett said.
"Chinese investors recognise technical expertise, and there is vast potential for partnership with Chinese companies that will support innovations in UK advanced manufacturing," he said.