The government has made a £100 million investment in the planned Sizewell C nuclear station on the Suffolk coast. The funding is in the form of purchasing a Combined Option by the government in shares in the Sizewell C GenCo and the land on which the Sizewell C power plant is planned to be built.
The £100 million investment is derived from this Financial Year (2020 to 2021), and is in addition to up to £1.7 billion of new direct government funding made available at the Spending Review for developing a large-scale nuclear project. The aim of the latter funding is to allow the project to reach the point of Final Investment Decision this parliament, with a £120 million enabling fund to support further nuclear projects and inform potential investment decisions during the next Parliament.
But BEIS said the UK government was “not committed to Sizewell C as a result of this announcement”. If Sizewell C reaches a Final Investment Decision, the government will be reimbursed the £100 million option fee with a financing return, either as cash or an equity stake in the project depending on market demand at the time.
If the project does not reach FID, then the government would ask for either Sizewell C Company shares or the Sizewell C site. The government could call for the Sizewell land site to use for other nuclear or low-carbon projects, or call for the shares in Sizewell C should it consider these have more value at the time. If EDF were not able to provide us with either as requested, HMG would be repaid the original sum together with the financing return.
BEIS said, “This ensures that the money, together with a financing return (or equivalent value in shares or land), would be returned to taxpayers whether the project proceeds or not.”
The new funding will be invested by EDF in the project to help bring it to maturity, attract investors, and advance to the next phase in negotiations. The project aims to attract further financing from private investors and potentially the government.
Ministers have made a commitment to reaching a Final Investment Decision on at least one large-scale nuclear power station this parliament and negotiations between the government and Sizewell C project developer, EDF, have been ongoing since last year. Business and Energy Secretary, Kwasi Kwarteng, said, “In light of high global gas prices, we need to ensure Britain’s future energy supply is bolstered by reliable, affordable, low carbon power that is generated in this country.”
He added, “The funding announced today will further support the development of Sizewell C during this important phase of negotiations as we seek to maximise investor confidence in this nationally significant project.”
The announcement comes as the Nuclear Energy (Financing) Bill, which will enable a Regulated Asset Base (RAB) funding model framework for new nuclear projects, passes through Parliament.