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Sizewell C inches forward with £100mn government funding
2/2/2022
News
The government has backed plans to build a new nuclear power plant in Suffolk with £100mn of funding intended to support the continued development of the Sizewell C project and, potentially, to attract further financing from private investors.
Negotiations between the government and project developer EDF have been ongoing since last year, and ministers have made a commitment to reaching a Final Investment Decision (FID) on at least one large-scale nuclear power station before the end of this parliament. To achieve this, the government has made up to £1.7bn of new direct government funding available and has created a £120mn enabling fund to back new nuclear projects.
If built, the 3.2 GW capacity Sizewell C would generate sufficient power to supply the equivalent of around 6mn homes.
The £100mn option fee will be invested by EDF into the project to help bring it to maturity. In return, the government will take certain rights over the land of the Sizewell C site and EDF’s shares in the Sizewell C company, providing opportunities to continue to develop nuclear or alternative energy infrastructure on the site should the project not ultimately be successful, says the Department for Business, Energy and Industrial Strategy.
If Sizewell C reaches a positive FID, the government says it will be reimbursed the £100mn option fee with a financing return, either in the form of cash or an equity stake in the project. If the project does not reach this milestone, then the government could receive company shares, the site itself, or EDF will have to refund the money along with a financing return.
The announcement comes as legislation to enable a new Regulated Asset Base (RAB) funding model framework for new nuclear projects is passing through Parliament. The government estimates that RAB could lower the cost of each new large-scale nuclear power project by more than £30bn, compared to the existing Contracts for Difference model. The model is also expected to reduce Britain’s reliance on overseas developers for finance by substantially widening the pool of private investors.
The announcement was welcomed by the Unite trade union. General Secretary Sharon Graham said: ‘This is a step forward but the government needs to take the handbrake off when it comes to the development of new nuclear power stations… Any further delay in bringing forward the final decision on building Sizewell will be disastrous, as the vital skills that have been learned and developed at Hinkley Point could be lost and fail to transfer to the new project.’
Many environmentalists tended to see it differently, suggesting that the time has come to end investment in huge new nuclear projects. Greenpeace UK Policy Director Dr Doug Parr said: ‘The economics of this project are all over the place, with UK taxpayers left to pick up the tab. Instead of pursuing outdated, costly technologies, it’s time the government got a grip on the clean technology race going on globally and went for 100% renewables power as fast as possible.’
Meanwhile, construction of a similar project, Hinkley Point C by EDF Energy continues in Somerset. Last week the government’s Office for Nuclear Regulation (ONR) granted permission for the company to start further construction at the only other new nuclear plant being built in the UK. Construction work began on Hinkley Point C in 2016 and EDF predicts the site will start generating power in mid-2026.
