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The UK has ended years of uncertainty over the longer term of its nuclear industry by pledging £11.5bn of latest state funding for the Sizewell C project in Suffolk, taking the whole taxpayer investment in the location to £17.8bn.
Chancellor Rachel Reeves will announce the record public investment in nuclear energy on Tuesday, telling attendees on the GMB Congress that she is ending “years of delay” over Sizewell, which can support the creation of 10,000 jobs.
Although Reeves has needed to make tough decisions in the federal government’s spending review on day-to-day departmental budgets, she was in a position to find the additional billions for Sizewell C through a change to her fiscal rules. This has made £113bn available for extra capital spending across government, funded by borrowing.
The move marks a return to significant state funding for nuclear energy after the UK selected the private sector to finance and construct its last project, Hinkley Point C in Somerset, which is heavily delayed and over budget. The previous record public investment in nuclear energy was £2bn for the Sizewell B plant in 1987, or £7bn in today’s prices.
The UK government already has a partnership with French state-owned energy group EDF, which has kept a 15 per cent stake in Sizewell C. The pair are actually looking for financial commitments from several other investors before they will log out a “final investment decision”, expected next month during an Anglo-French summit in London.
The chancellor will promise £14.2bn of taxpayer funding for the three.2 gigawatt plant over the present parliament, including a £2.7bn commitment she previously made within the autumn Budget. The Treasury had already committed £3.6bn over the past two years.
EDF has said the ultimate investment decision will depend upon securing private investment and on whether it could possibly make its expected return on capital, but Simone Rossi, the corporate’s UK chief executive, said the project would profit the UK’s “energy security and economic growth”.
Private investors expected to bid for stakes in Sizewell C include Canadian pension fund CDPQ, Amber Infrastructure Partners, Brookfield Asset Management, pension fund USS, Schroders Greencoat, Equitix, Centrica and insurer Rothesay. The full cost of the project may very well be near £40bn by the point it’s built, industry figures consider.
Ministers are encouraging the event of latest nuclear power stations within the UK to offer future supplies of “baseload” electricity to balance the more intermittent supply of solar and wind power.
But no latest nuclear plant has opened within the UK since 1995 and most of the prevailing ageing fleet — aside from Sizewell B — is ready to be phased out by the early 2030s.
On Tuesday the federal government also announced that a bunch led by British engineer Rolls-Royce had been chosen as the popular bidder to construct the country’s first small modular nuclear reactors.
The choice marks a step forward for the technology within the UK, although SMRs usually are not prone to be up and running in Britain until the 2030s.
The federal government said it could also invest greater than £2.5bn in nuclear fusion over five years in what it called a “record investment” within the nascent technology.
Melanie Windridge, head of advisory group Fusion Energy Insights, praised the federal government for recognising the “economic value of developing fusion on this country”.
The sum is barely lower than the US is spending on fusion and one-third of China’s annual investment on the technology.
Additional reporting by Tom Wilson and Rachel Millard
