The Government is to consider direct investment to build a new multibillion-pound nuclear power station.
Business Secretary Greg Clark said the move was an “important next step” for the project at Wylfa on Anglesey in north Wales.
Any direct investment in the project will be made alongside the Japanese government and Horizon Nuclear Power, a subsidiary of Japanese giant Hitachi, which is developing Wylfa.
Mr Clark said: “We will now be entering into negotiations with Hitachi on the next phase of the Wylfa project.
“Both the National Audit Office and Public Accounts Committee have recommended that the Government consider variations from the Hinkley Point C financing model in order to reduce costs to consumers.”
Secretary of State for Wales Alun Cairns said: “There are few challenges more important than securing a sustainable energy future as part of our modern Industrial Strategy.
“By entering into negotiations, the UK Government is also highlighting the attractiveness of Wales as a place to do business and invest.
“This would be the biggest infrastructure project in Wales for a generation and could bring significant benefits to the economy through increased high-quality employment and supply chain opportunities.”
Mr Clark said commercially sensitive negotiations with Hitachi will now start.
“This is an important next step for the project, although no decision has been taken yet to proceed with the project, and successful conclusion of these negotiations will be subject to full Government, regulatory and other approvals, including but not limited to value for money, due diligence and state aid requirements.
“It remains the Government’s objective in the longer term that new nuclear projects – like other energy infrastructure – should be financed by the private sector.
“Alongside our discussions with developers we will be reviewing the viability of a regulated asset base model as a sustainable funding model based on private finance for future projects beyond Wylfa, which could deliver the Government’s objectives in terms of value for money, fiscal responsibility and decarbonisation.”
Kate Blagojevic, head of energy at Greenpeace UK, said: “The notion that new nuclear will be good value for money is farcical when it’s so much more expensive than cleaner, safer renewable alternatives that are faster to build.
“The economics are so weak that private investors have refused any involvement and the Government is having to bail out this disastrous project before construction has even begun. This should be a red flag to the Government that it is a terrible deal.”
Caroline Lucas, co-leader of the Green Party, said: “This announcement takes us a step further towards a calamitous mistake by a Government who are utterly failing on energy policy.
“Taking a stake in this nuclear monstrosity would see taxpayers locked into the project, and paying out for a form of electricity generation that’s not fit for the future.”
Tom Greatrex, chief executive of the Nuclear Industry Association, said: “Today’s announcement, which reiterated UK government support for civil nuclear as a vital element of a future low carbon power supply and confirmed the Horizon Wylfa Newydd project as the next element of our new build programme, is good news towards meeting our decarbonisation targets.”
There has been speculation that the Government is not going to support plans for a tidal lagoon in Swansea but no announcement was made by Mr Clark.
Mr Clark did not comment on speculation that a guaranteed price for the electricity generated at Wylfa is expected to be around £15 per megawatt hour less than the £92.50 so-called strike price awarded to EDF for the Hinkley Point C nuclear power station being built in Somerset.
Unite officer Peter McIntosh said: “We welcome the Government’s decision as it could create thousands of jobs during its construction, as well as generating highly skilled employment throughout its operational lifetime.
“This will be a step in the right direction and could be an accelerator for growth generally.
“The tidal lagoon initiative would be a landmark project unleashing an economic boost for the Welsh economy and create thousands of much-needed decent jobs throughout the wider south Wales economy.
“Wales deserves this opportunity to build a new industry based upon its unique tidal resource.
“We call on Greg Clark to give financial support for the Swansea project as well.”
Ms Blagojevic added: “Greg Clark was decidedly coy about what has already been offered to Hitachi.
“He seems intent on keeping the details of the deal secret for as long as possible.
“If the Government insists on using our money to subsidise failure, the least they can do is explain what advantage we gain, because it won’t be affordable, reliable power.”
“Lawyers have advised Greenpeace that this deal may not comply with EU competition law.”
Wales First Minister Carwyn Jones said: “It is a highly significant milestone for the Wylfa Newydd project, which has the potential to transform the Welsh economy.”
Wylfa is planned to start generating electricity by the mid 2020s, providing energy to five million homes, or 6% of the UK’s total energy needs.
Speaking in the Commons, shadow business secretary Rebecca Long-Bailey welcomed the announcement but said she was “deeply concerned” by the way in which the negotiations were taking place.
She said: “Without sufficient detail and transparency this House is currently unable to determine the risks and benefits born by consumers and taxpayers in this proposed deal.”
She later added: “Is this simply a done deal, if so have any binding commitments been made or any such preliminary heads of terms or memorandums of understanding been issued for example?”
The Labour frontbencher went on to hit out at reports the Government would not be supporting plans for a tidal lagoon in Swansea.
She said: “After years of planning and campaigning it’s frankly outrageous to assume that Swansea is somewhat redundant given the plan for investment in Wylfa is a very short sighted outlook.”
Mr Clark responded saying that he was entering the start of negotiation and that a “deal has not been agreed”.
On the issue of the tidal lagoon, he added: “I believe in a diverse energy supply, but we do need to make sure that value for money is offered for taxpayers and bill payers”.