London: Britain pledged £2 billion ($3.1 billion, 2.75 billion euros) on Monday for a proposed nuclear plant in southwest England, paving the way for the country’s first such new power station in 20 years.

Finance minister George Osborne announced the funds would be a guaranteed infrastructure investment, saying that the Hinkley Point plant was necessary to meet Britain’s energy needs as older coal and nuclear plants are retired.

A consortium led by French energy company EDF is expected to make a final decision this year on whether to invest in the plant, but the firm’s chief executive welcomed the chancellor’s move.

‘The Chancellor’s approval of the infrastructure guarantee is a clear sign of the Government’s commitment to Hinkley Point C,’ Vincent de Rivas was quoted as saying in a statement from the British Treasury.

‘It is further progress towards a final investment decision on a project which will provide reliable, affordable low carbon electricity for decades.’

EDF is the lead contractor in the consortium, which also includes Chinese firms China General Nuclear Corporation and China National Nuclear Corporation.

The two Chinese companies are expected to largely finance and get a stake of around 40 per cent in the project, which will have two new reactors that authorities hope will generate seven percent of Britain’s electricity.

The announcement came during Osborne’s five-day visit to China, and he described the guarantee as ‘another move forward for the golden relationship between Britain and China’.

‘Britain was the home to the very first civil nuclear power stations in the world and I am determined that we now lead the way again,’ Osborne said in the Treasury statement.

‘Nuclear power is cost competitive with other low carbon technology and is a crucial part of our energy mix.’

The final decision on investment in the plant could come during an expected visit to Britain by Chinese President Xi Jinping in October.

The Austrian government has filed a legal complaint against state subsidies for the Hinkley Point nuclear plant to the European Court of Justice.

Seen as a major boost to the nuclear industry four years after the disaster at Japan’s Fukushima plant, some environmentalists see Hinkley Point as an unnecessary support for nuclear energy just as renewable energy technology has begun to take hold.