UK hopes to remove China from Sizewell C project
Image credit: EDF
The UK government is closing in on a deal that could remove China General Nuclear (CGN), the state-owned nuclear energy company, from the planned Sizewell C power station in Suffolk, according to a report in The Guardian.
Plans for Sizewell C, which would sit beside Sizewell B, have been under way for more than a decade. The £20bn Sizewell C station, which is planned as a “near replica” of Hinkley Point C in Somerset, would generate 3.2GW of power and together the two stations would provide an estimated 13 per cent of the UK’s electricity needs. While Hinkley C is being constructed, Sizewell C remains in the planning and development stage and faces opposition from local campaigners.
Sizewell C is being developed by EDF, which is majority-owned by the French government. CGN has a 20 per cent stake in the civil nuclear project, and has also thrown considerable investment behind Hinkley C.
The US government has been applying pressure on its ally to blacklist CGN from its major infrastructure projects, citing national security concerns that CGN rejects.
Now, amid fresh geopolitical tensions, ministers are in discussions to end CGN’s involvement and instead take a significant public stake in the project. According to The Guardian, plans under discussion include the government taking a stake in a development company that would push Sizewell C through planning and development with EDF, replacing CGN as its partner.
EDF’s board is expected to hold a meeting in early November, to discuss pushing the project forward. Reports say EDF is wary about pumping tens or hundreds of millions of euros into the enormous project without a firm commitment from the UK government.
The UK government is reportedly keen to announce a deal on Sizewell C ahead of Cop26, which is will host in Glasgow in November. It hopes to encourage private investors such as L&G and Aviva to partake at a later stage through the regulated asset base (RAB) funding model. RAB funding, which is used to fund water companies and airports, would reduce financial reliance on the UK government and EDF. EDF is banking on RAB funding, which would reduce the guaranteed prize for electricity generated at Sizewell C to as little as £30-60/MWh, compared with £92.50/MWh for Hinkley C.
Squeezing CGN out of Sizewell C would renege on the government’s 2015 agreement with the company, under which it secured funding for Hinkley and Sizewell and agreed to consider installing CGN-designed reactors at Bradwell B in Essex; this is looking increasingly unlikely to be approved by the UK’s nuclear regulator.
The soaring price of gas has put renewed pressure on the government to show its commitment to domestic zero-carbon energy projects to reduce reliance on foreign energy imports while decarbonising the electricity sector. All but one of the UK’s active nuclear power stations are due to enter decommissioning by 2030.
For several months, reports have suggested that the government has been investigating ways to remove CGN from its upcoming infrastructure projects.
Last week, it was reported that executives from US construction company Bechtel have partnered with Westinghouse to develop another nuclear power station at Wylfa, Anglesey, in a project to strengthen the UK-US relationship and “[promote] the use of this secure, reliable technology in new markets to compete against state-backed Russian and Chinese options”. Hitachi scrapped plans to build at the site last year, after failing to secure funding for the project.
The Department for Business, Energy, and Industrial Strategy told The Guardian: “Nuclear power has a key role to play as we work to reduce our reliance on fossil fuels and exposure to volatile global gas prices. CGN is currently a shareholder in Sizewell C up until the point of the government’s final investment decision. Negotiations are ongoing and no final decision has been taken.”
Meanwhile, the shadow Foreign Secretary, Lisa Nandy has told media that key industries must be better protected from Chinese state-backed involvement in the interest of national security, although she stopped short of saying it should be stopped entirely. Nandy told Reuters: “Some people have likened it to a Cold War type situation. It isn’t, it’s far more complicated than that. We’ve got to be far more clear-eyed about the risks to the UK posed by Chinese investment and the Chinese government.”
Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.