UK’s £38bn Sizewell C nuclear plant secures private investment
Ministers on Tuesday announced the ‘final investment decision’ for the Suffolk project developed by EDF
Ministers and investors have given the green light to build the UK’s second new nuclear energy plant, in a move that should boost low carbon power supplies in the 2030s but will add immediately to consumer bills.
The UK government on Tuesday announced a “final investment decision” on the £38bn Sizewell C project due to be built in Suffolk, having secured investment from private groups.
The government will be the biggest single investor in the project, with an initial 44.9 per cent equity stake.
La Caisse will take 20 per cent, Centrica 15 per cent and Amber Infrastructure will take what is described as an “initial” 7.6 per cent stake. France’s state-owned utility EDF is taking 12.5 per cent.
The private investors will be protected from cost overruns and UK households will pay for the project via higher energy bills throughout construction.
Much of the cost is to be funded by loans. The government said it expects the “majority” of the debt finance to be provided by the UK’s National Wealth Fund. It has not yet set out full details of how the funding will be split between investors.
The government wants to revive Britain’s nuclear power industry and replace its ageing facilities, all but one of which is due to close by 2030. Nuclear power supplies about 15 per cent of Britain’s electricity.
Sizewell C is a sister project to Hinkley Point C, which France’s state-owned utility EDF is building in Somerset but which is running several years behind and over budget.
Ed Miliband, Britain’s energy secretary, said the government was “making the investment needed to deliver a new golden age of nuclear”.
Centrica’s chief executive told reporters on Tuesday that the Sizewell C deal means investors do not have any obligation to fund the project if costs rise beyond £47bn.
In that event, the government will either provide the further required funding or scrap the project and compensate the investors. If the project is built for less than £40bn, slightly higher than the project cost estimate of £38bn, investors will be rewarded.
Households will pay for the project via a surcharge on bills. The government said this would come to an average £1 a month throughout the construction of the project.
Such “regulated asset base” models are used to fund large infrastructure projects, since they lower overall project costs by reducing the risk for investors.
The expected £38bn cost of Sizewell C announced on Tuesday compares to an estimate of £20bn given by EDF in 2020 “including inflation and contingencies”.
Julia Pyke, joint managing director of Sizewell C, said the £38bn cost estimate followed “very detailed scrutiny of costs at [sister project] Hinkley Point C and long negotiations with our suppliers”.
Sizewell C, which will use EDF’s European pressurised water reactor technology, will have a total capacity of 3.2GW, potentially enough to power around 6mn homes.
Centrica said it expected the project to come online in 2035. The last nuclear power station to open in Britain was Sizewell B in 1995.