The U.K. government has announced the start of negotiations with French state-controlled utility EdF Group over the financing and construction of the 3,200 MW Sizewell C nuclear power plant in Suffolk on England's east coast.
The U.K. Dept. of Business, Energy and Industrial Strategy says it aims to invest in “at least one” nuclear plant before the next general election, currently set for late 2024.
EdF this June applied to the Office for Nuclear Regulation for a Sizewell site license after having sought planning approval for the project. EdF noted that financial investment decisions could be made by early 2022 followed soon after by construction.
If it goes ahead, the 3,340 MW Sizewell C plant in Cumbria would be a near replica of the $29 billion twin EPR reactor Hinkley Point C unit being built by an EdF-led team in Somerset. However, Sizewell’s privately financing model will likely change for the project.
At Hinkley Point C, EdF controls 66.5% of the project company with China General Nuclear Corporation (CGNC) holding the balance. That deal is financed by a “contract for differences” which sets an index linked energy price of $120 per MWh at 2012 prices for 35 years.
However, the government has said with Sizewell it would continue “to explore a range of financing options for new nuclear with developers including the Regulated Asset Base (RAB) funding model.
Rather than having a target energy price, under the RAB system, electricity tariffs would be controlled by a regulator considering factors such as need for investment and a fair rate of return on capital. The government also indicated its willingness to share in construction risk “provided there is clear value for money.”
To what extent if any CGNC would participate in a Sizewell C deal remains uncertain. Under the original Hinkley Point C deal, CCGN would take 20% of the Sizewell project to EdF’s 80%. However, the U.K.’s decision this summer to eliminate Chinese Huawei technology from the cell phone networks soured relations between the two countries.
Nevertheless, the start of Sizewell negotiations is good news, according to Tom Greatrex, chief executive of the Nuclear Industry Association. “As well as at least 60 years of constantly available clean electricity, this project will provide thousands of highly skilled, well paid and long-term jobs across the supply chain, at a time when they are badly needed.”