UK government takes 50% stake, confirms backing for Sizewell C

Tuesday, 29 November 2022

The Department for Business, Energy and Industrial Strategy (BEIS) said that EDF (owned by the French state) would also provide additional investment to match the UK government's stake and "the government will work with the project company to seek to attract new third-party investment to help finance the project's construction and operation". The total cost of the project was estimated at about GBP20 billion by its then partners in 2020.

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 Energy submitted a development consent order (a planning application) for the plant in May 2020, which was granted in July this year. EDF Energy has said it expected to make a final investment decision later this year or in 2023.

On Tuesday, while welcoming the UK government's investment, EDF said: "The final investment decision remains subject to the achievement of certain key stages, in particular the ability to raise the necessary financing to carry out the project as well as the deconsolidation of the project from the Group's balance sheet."

EDF added that construction of the plant remained subject to that final investment decision, adding that it planned to "retain only a minority stake in the final investment decision - a maximum of 20%".  

In January, 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.

BEIS said it would create "10,000 highly skilled jobs and provide reliable, low-carbon, power to the equivalent of 6 million homes for over 50 years".

Business and Energy Secretary Grant Shapps said the impact of Russia's war on Ukraine meant "we need more clean, affordable power generated within our borders - British energy for British homes. Today’s historic deal giving Government backing to Sizewell C’s development is crucial to this, moving us towards greater energy independence and away from the risks that a reliance on volatile global energy markets for our supply comes with.

"This is at the heart of a package of measures that - together with the new Great British Nuclear [government body] and powers of the Energy Security Bill - will ensure secure supply for now, and for generations to come."

UK Chancellor Jeremy Hunt said the investment "represents the biggest step on our journey to energy independence - the first state backing for a nuclear project in over 30 years. Once complete, this mega project will power millions of homes with clean, affordable, home-grown energy for decades to come."

Simone Rossi, CEO of EDF Energy said: "This is a big vote of confidence in Sizewell C and we are very excited the government is partnering with us to prepare the project for further investment. Sizewell C will build on the achievements of Hinkley Point C and replicating its design will provide more certainty over schedule and costs. It will deliver another big boost to jobs and skills in the nuclear industry and provide huge new opportunities for communities in Suffolk. New nuclear will protect Britain from volatile global gas markets and help keep bills under control for the country’s homes and businesses."

Former Prime Minister Boris Johnson initially announced a GBP700 million investment in the Sizewell C project before he left office in September. His short-lived successor as Prime Minister, Liz Truss, committed to continue the investment in new nuclear, and now her successor as Prime Minister, Rishi Sunak, has reconfirmed it.

The money is part of the GBP1.7 billion of new direct government funding to develop a large-scale nuclear project announced in October.

EDF agreed in October 2015 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. Now CGN has exited the Sizewell C project and work appears to have paused at Bradwell B although, according to the 'About Us' page of the Bradwell project website, CGN is still the owner of 66.5% of that project, with EDF holding the remaining third. CGN also retains its interest in the Hinkley Point C project.

In response to questions about CGN's exit from the Sizewell C project, a spokesperson for the Chinese Embassy in London, said: "We have noticed that the relevant Chinese company has signed an agreement, and we respect its decision. As a principle, we oppose any discriminatory practices against Chinese businesses. It is hoped that the UK side will provide a fair, just and non-discriminatory environment for Chinese companies in the UK."

The UK currently has one nuclear power station under construction, at Hinkley Point C in Somerset in south west England. Construction began in December 2018 for the plant which is composed of two EPR reactors of 1630 MWe each. The start of electricity generation from unit 1 is expected in June 2026, with unit 2 following in 2027 with a projected lifespan of 60 years.

The UK's energy strategy unveiled in April set the target for eight new reactors plus small modular reactors to produce 24 GWe capacity by 2050, meeting about 25% of the UK's projected electricity demand. The UK currently generates about 15% of its electricity from about 6.5 GW of nuclear capacity.