The project was hailed Monday as a breakthrough deal in which investors agreed to front the cost of construction, which is estimated at $25.8 billion, in exchange for a locked-in price for electricity the plant produces, the BBC reported.
"For the first time, a nuclear station in this country will not have been built with money from the British taxpayer," Secretary of State for Energy Edward Davey said.
Construction for the plant in Somerset in the southwestern portion of the country will be led by the French firm EDF Energy, the BBC said.
Critics complain that the locked-in price of $149.30 per megawatt hour of electricity is too high. That is about twice the current going rate for electricity in Britain. Further, there is monetary incentive for Britain to approve a second plant for EDF Group, which agreed to drop the price to $144.40 per megawatt hour if it is allowed to build a second nuclear plant at Sizewell in Suffolk in the southeastern part of the country.
"What it equates to actually is a subsidy and the coalition [government] said they would never subsidize nuclear," Paul Dorfman of the Energy Institute at University College London, said.
Prime Minister David Cameron disagreed, saying the British economy and the British people would both benefit from Britain embracing nuclear.
"This underlines the confidence there is in Britain and makes clear that we are very much open for business," said Cameron, who called the agreement, "an excellent deal for Britain and British consumers."
Opposition leader Ed Miliband of the Labor party was skeptical the pricing arrangement would hold.
"We've got the prime minister who says he can fix prices 35 years ahead for the energy companies but he can't freeze prices now for the consumer. No wonder we've got a cost-of-living crisis in this country," he said.
The approved plant will include two nuclear reactors, which are expected to operate for 60 years.
The project is expected to create 25,000 temporary construction jobs and 900 permanent positions.