The British government has moved closer to taking a stake in nuclear power generation for the first time in more than a decade after making an initial £ 100m investment in the planned Sizewell C power station in Suffolk.
The funding announced on Thursday is part of efforts by ministers to accelerate the project – led by France’s EDF Energy with China’s CGN as a minority partner – which has been plagued by delays as successive governments have struggled to find a funding model which will attract private funding. .
The government said the £ 100 million would help bring the Sizewell project to maturity and attract other external investors. It will work like a convertible loan, which will start as soon as Sizewell C reaches its final investment decision, which is expected over three years.
At that point, the government would either take a stake in the project or be repaid. Thereafter, if EDF failed to deliver the scheme, the government would take control of the subsidiary erected to build the power station and the site on the Suffolk coast designated for the plant.
Simone Rossi, CEO of EDF Energy, welcomed the investment, which he said, together with the French company’s own funding, “will allow us to continue to move the project towards a financial investment decision”.
The British government has since had no involvement in nuclear power generation sold its 36 per cent stake in British Energy – which owned eight UK nuclear plants – to EDF in 2009.
The investment comes as ministers continued to grapple with a growing cost of living crisis, including rising energy bills caused by record gas prices. This pressure further fueled efforts to begin the development of more low-carbon electricity generation.
Prime Minister Boris Johnson has committed himself to making nuclear energy a key role in achieving the UK’s climate goal of achieving net zero emissions by 2050.
Despite commitments by successive governments over the past decade to build a new generation of nuclear power stations, most of the projects collapsed because the private sector was unwilling to fund them.
The government first proposed in 2018 that it was prepare to take interests in new nuclear power stations.
Most of the UK’s existing fleet of aging reactors, which supply 16 per cent of the country’s power, will be retired this decade, with the last one to close in 2035.
The government has said the £ 100m in funding is separate from the £ 1.7bn it awarded to Sizewell C in October to help get the project to a final investment decision. It added the larger allocation is subject to future negotiations with EDF.
In the longer term, the UK plans to use a funding model, known as the regulated asset base model, to pay for the construction of the project. This will add a levy to household energy bills to cover the cost of building the plant.
The government hopes its financial involvement with Sizewell C will help encourage outside investors to provide additional funding as it expel CGN of the project, as part of a larger push against Chinese involvement in key UK infrastructure.
In a statement, the government said no decision has yet been made on the “final setup” of investors in the project.
Alison Downes, of the Stop Sizewell C protest group, said the statement was particularly quiet about CGN. “The elephant in the room is still China – this announcement does not mention CGN, or it looks like he is doing anything to remove them,” she said.