Private investment sought for Sizewell C project
18 September 2023
The UK's Department for Energy Security and Net Zero has launched a pre-qualification for potential investors as the first stage of an equity raise process for the Sizewell C nuclear power plant project in Suffolk, England.
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How Sizewell C could look (Image: EDF Energy)
"Specifically, we are aiming to obtain investment from organisations able to take a meaningful stake in the company," the department said.
"Being able and willing to own a significant part of the company's equity will be vital in ensuring that investors are able to have a substantial and positive influence on delivery over the construction period. It will also ensure that investors are meaningfully exposed to the incentives included in the company's licence, motivating them to monitor and intervene in delivery."
It added that private sector investors must "bring sufficient benefits to the company to justify their involvement". Investment is therefore being sought by the government, the Sizewell C Company and EDF - the project's lead developer - from companies with significant experience in the delivery of major infrastructure projects, especially in large-scale nuclear or other complex energy or infrastructure projects.
"In taking this stake, at the time of a positive Final Investment Decision, investors would be expected to make a commitment to their share of the company's equity requirement," the department said. "This would provide confidence to the government, EDF and the company that new investors would fulfil their shareholder obligations as Sizewell C moves into the full construction phase."
Prospective investors have now been invited to complete a pre-qualification questionnaire (PQQ), which will set out certain requirements in more detail which investors will need to meet in order to pre-qualify. The PQQ is a bidding requirement for the equity raise, and compliance with it is a pre-requisite for any potential investor to be eligible for participation in the rest of the process. Investors will have until 9 October to submit their responses to the pre-qualification questions. Following assessment of their responses, the investors who have been successful in the pre-qualification phase shall be invited to participate in the bidding process for the Sizewell C equity raise.
In January last year, the UK government provided GBP100 million in funding to develop the project, and also took legislation through parliament allowing a new way of funding new large infrastructure projects - a Regulated Asset Base (RAB) funding model - and in this case gave itself the option to take a 20% stake in the project.
"The government has assessed that seeking private investment through the RAB structure has true potential to result in a good value for money outcome for consumers and taxpayers, as the RAB structure is set up to incentivise the company (and in turn, the private investors) to drive the project's construction to schedule and ultimately help to promote efficiency and enhance overall value," the Department for Energy Security and Net Zero said.
"Any investment will be subject to strict national security checks," it added.
The government has already invested GBP700 million (USD868 million) in the project and ministers have also made GBP511 million available to continue project development and prepare the site for construction, ahead of the planned private equity raise for the project in advance.
"Investing in Sizewell C is an exciting opportunity to be a part of the UK's nuclear revival - delivering clean, reliable, and affordable power for generations to come," said Secretary of State for Energy Security and Net Zero, Claire Coutinho. "This project will create thousands of jobs, power six million homes and will boost our energy security. We are focused on securing good value for taxpayers and look forward to seeing strong and competitive bids to be a part of this exciting project."
Sizewell C Company Joint Managing Director Julia Pyke added: "The launch of the formal equity raise opens another exciting phase for the project, following a positive response from investors during market testing. Investors who participate in Sizewell C would be contributing to one of the biggest clean energy projects in the UK. They should feel confident in our proposals as we are building a replica project with government backing, a mature reactor design and a workforce ready to build it."
The plan is for Sizewell C to feature two EPRs producing 3.2 GW of electricity, enough to power the equivalent of around six million homes. It would be a "replica" of the Hinkley Point C plant, under construction in Somerset.
EDF agreed in October 2016 with China General Nuclear (CGN) to develop the Sizewell C project to the point where a final investment decision could be made. EDF had an 80% stake and CGN a 20% stake. CGN planned that becoming a minor shareholder in the project would "lay the foundation for further development of CGN-led projects in the UK", notably at Bradwell B. However, the so-called "golden era" of UK-China relations has ended in recent years with the UK government citing security concerns as it reviewed and blocked Chinese investments in UK infrastructure. In November 2022, the UK said it will invest GBP679 million and become a 50% partner with EDF in the Sizewell C nuclear project.
Welcoming the commencement of the private investment process, Nuclear Industry Association Chief Executive Tom Greatrex said: "This marks the start of an exciting new chapter for Sizewell C and for the future of nuclear in the UK. The capital raise is vital to delivering the project, which will ultimately ensure we have better energy security and enough clean power to meet future demand. Sizewell C will be one of the world's greatest low-carbon assets, helping the UK significantly cut reliance on gas and creating thousands of highly-skilled jobs across the country."
Researched and written by World Nuclear News