Hinkley Point B
The controversial Hinkley Point C nuclear plant will be built next to Hinkley Point B (pictured) and Hinkley Point A in Bridgwater Somerset Reuters

Chancellor George Osborne said he is "pretty confident" about plans to build and fund Hinkley Point C nuclear power station despite growing concerns the facility will become a financial white elephant for the UK government.

Osborne told the House of Lords' Economic Affairs Committee that he was confident the government would be able to do a deal to fund the plant but that it was still in negotiations with joint investors EDF Energy and China General Nuclear Corporation and China National Nuclear Corporation on the construction of the project.

French energy company EDF, has already warned that the project will be delayed and will not start generating power in 2023, as previously expected. Controversy has surrounded the awarding of the contact for Hinkley Point with many commentators insisting that the government has agreed to too high a "strike price" – or cost to government per megawatt (MWh). The strike price for Hinkley Point is set at £92.50/MWh and delays will only add to the disquiet surrounding the project.

The House of Lords' Economic Affairs Committee's Lord Turnbull suggested: "It's not 'can we do the deal' but 'should we do the deal. This thing at £92 per kWh is turning out to be incredibly expensive and a huge commitment and for a design which the French can't get to work.

"Shouldn't we really go back to the drawing board, rather than plumping for what I think will be a kind of bottomless pit and a big white elephant?"

The construction of the plant is expected to provide and estimated 900 jobs in the Somerset-based plant over 60 years with around 25,000 ancillary employment opportunities for the surrounding area. Commentators have pointed out that Britain needs to replace an estimated 20% of its ageing nuclear and coal power plants during the decade, but that the speed that this needs to happen has led the government to pay an unprofitable strike price.

The chancellor told the committee that he is to visit China this month to lobby hard on the completion of the deal and is expecting the Chinese president Xi Jinping to visit the UK in October. Hinkley Point is a proposed 3.2GW nuclear power plant with two EPR reactors that will be built for EDF in Somerset. The nuclear power station is expected to meet 7% of Britain's electricity generating needs. It will be built next to the existing nuclear power plants Hinkley Point A and Hinkley Point B.

In readiness for the project and to prepare a potential workforce, EDF has invested £11m in training, education and skills in Somerset opening a new Energy Skills Centre and a Construction Skills Centre in partnership with Bridgwater College. EDF is expected to retain a 45 to 50% stake in Hinkley Point, with China General Nuclear Corporation and China National Nuclear Corporation retaining a combined stake of up to 40%. Other investors will take any remaining share.