UK government delays Sizewell C decision

Friday, 8 July 2022

In a written statement to the House of Commons, Business Minister Paul Scully said that Business, Energy and Industrial Strategy Secretary Kwasi Kwarteng's decision would now be given by 20 July.

"This is to ensure there is sufficient time to allow the Secretary of State to consider the proposal. The decision to set the new deadline for this application is without prejudice to the decision on whether to grant or refuse development consent," the written statement added.

The application for development consent was made under the Planning Act 2008 by EDF's NNB Generation Company (SZC) Limited for the construction and operation of a nuclear power station near Leiston in Suffolk.  Under the act, the secretary of state should make a decision "within three months of the receipt of the Examining Authority's report" unless a new deadline is set, as in this case, via a statement to Parliament.

The announcement of the delay came on the day UK Prime Minister Boris Johnson announced his resignation as Conservative Party leader, and his intention to step down as prime minister once a successor as party leader has been chosen. Johnson's decision to reluctantly leave Number 10 Downing Street followed a string of resignations from his ministerial team, although the business secretary was not among them.

Johnson's energy strategy, announced earlier this year, included ambitions for a big expansion of nuclear energy in the UK. Although any change of leadership produces uncertainty around government direction and policy, it is thought likely that the energy strategy - which did not face any big challenge from Conservative MPs - will survive the forthcoming change of prime minister.

 

Sizewell C background

 

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 submitted a development consent order (a planning application) for the plant in May 2020 and if all goes well, has said it expects to make a final investment decision later this year or in 2023.

In January, Kwarteng announced GBP100 million to advance the Sizewell C project to the next stage of negotiations, and help it attract further private investment - and last month the UK government published documents which show "significant progress" towards implementing a Regulated Asset Base (RAB) funding model for new nuclear power projects and set out its case for the Sizewell C project to receive funding under the model. It also launched a consultation on how projects would receive RAB financing.

Under the existing mechanism to support new nuclear projects - the Contracts for Difference (CfD) scheme - developers have to finance the construction of a nuclear project and only begin receiving revenue when the station starts generating electricity. The CfD approach was used to finance Hinkley Point C, with the developer agreeing to pay the entire cost of constructing the plant, in return for an agreed fixed price for electricity output once the plant is online. However, this approach places the entire construction risk on developers and led to the cancellation of other potential new build projects, such as Hitachi's project at Wylfa Newydd in Wales and Toshiba's at Moorside in Cumbria.

The Department for Business, Energy and Industrial Strategy (BEIS) announced in June 2018 that the government would review the viability of a RAB model for new nuclear projects and committed in January 2019 to publishing an assessment of this model by the summer. Under this model a company receives a licence from an economic regulator to charge a regulated price to consumers in exchange for providing the infrastructure in question. Most recently, the RAB model was used to successfully finance the construction and operation of the Thames Tideway Tunnel and Heathrow's Terminal 5. In December 2020, the UK government announced it would begin talks with EDF to enable investment in the planned Sizewell C nuclear power plant project.