The British government is seeking financial advisers to raise billions of pounds for the proposed Sizewell C nuclear plant in Suffolk as ministers close in on a tacit agreement with Beijing to remove Chinese state-backed energy group CGN from the £ 20bn project.
A new company would replace the joint venture between French utility EDF and CGN that is developing the £ 20bn Sizewell C plant in Suffolk, according to people familiar with the government’s plans. EDF holds 80 per cent under the current structure with the remainder held by the Chinese group.
Under the revised plans, both the UK government and developer EDF would take a 20 per cent stake each in the new vehicle and end CGN’s involvement in the project, reflecting how diplomatic relations between Beijing and London have deteriorated in recent years.
The government this week launched the search for investment bankers to find investors for the remaining 60 per cent stake, according to people with knowledge of the situation.
The new company would be chaired by Stephen Billingham, a City veteran who was previously finance director of British Energy, the group that owned Britain’s operational fleet of nuclear reactors before it was bought by EDF in 2008.
As part of the settlement, CGN is expected to remain a partner in Hinkley Point C, a 3.2 gigawatt nuclear power station under construction by EDF in Somerset in south-west England. It is the first and only one of a planned new generation of nuclear reactors under construction.
The Chinese company is financing a third of the costs to build the plant, which is nine years behind schedule. Its knowledge is also considered critical to the project because of its experience of the European Pressurized Reactor (EPR) technology, a Franco-German design, used in Hinkley Point C. CGN was the first to build working EPRs at a plant in Taishan in China .
The need to push ahead with Sizewell C, which will also use EPR technology, has taken on new urgency with the war in Ukraine adding to already high gas prices that are feeding through into more expensive domestic energy bills.
Business secretary Kwasi Kwarteng has insisted that Britain’s reliance on gas imports will fall in the long-term as the government encourages more renewable energy and new nuclear power stations.
Pressure to build more nuclear plants has also increased after EDF, which owns the country’s existing fleet along with Centrica, had to close several plants early. The remaining six operational power stations provide about 16 per cent of Britain’s generating capacity.
But this will drop further when Hinkley Point B in Somerset closes in July with four of the remaining five plants scheduled to close by March 2028.
CGN’s involvement in Britain’s civil nuclear program has come under intense scrutiny since the government announced a ban on Chinese telecoms equipment maker Huawei from its 5G mobile phone network in 2020 citing national security concerns.
CGN was also blacklisted by the US in 2019 over accusations of stealing US technology for military use. Simone Rossi, head of EDF’s UK arm, has said previously that US investors would be needed to finance Sizewell C, which would prove problematic were CGN to remain involved.
EDF and the UK government hope to attract private investors to Sizewell C via a “regulated asset base” model which is used to finance other infrastructure including gas networks and airports.
The model assures private investors a steady rate of return from an early stage but is controversial as consumers pay towards the financing of the project via a surcharge on their energy bills long before it is completed.
CGN and EDF Energy both declined to comment.