Out-Law News 2 min. read
28 Jan 2022, 3:42 pm
The funding is a sign that the government recognises the importance of securing low carbon nuclear power as part of the UK’s future energy mix, said nuclear energy projects expert Graham Alty of Pinsent Masons.
Currently, the UK government and EDF Energy, the proposed developer of the Sizewell C plant, are in negotiations over the financing of the project. The government has committed to making a final decision on its potential investment before the end of the current parliament in 2023.
In its statement, the Department for Business, Energy & Industrial Strategy (BEIS) said that the £100m of funding it has provided will be invested by EDF to “bring the project to maturity, attract investors and advance to the next phase in negotiations”.
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. New nuclear is not only an important part of our plans to ensure greater energy independence, but to create high-quality jobs and drive economic growth. 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.”
Simone Rossi, EDF Energy chief executive, said: “We’re very pleased that the government is showing its confidence in Sizewell C which, if approved, will lower energy costs for consumers and help to insulate the UK from global gas prices. Together with our own investment, these funds will allow us to continue to move the project towards a financial investment decision.”
“Sizewell C will benefit from being a near replica of Hinkley Point C in Somerset which is more than 5 years into construction and making great progress in the challenging context of the COVID pandemic. Sizewell C will provide a huge economic boost to East Suffolk where it already enjoys the support of most local people. It will also bring new opportunities for thousands of nuclear supply chain companies up and down the country,” Rossi said.
The government pledged last year to establish a ‘regulated asset base’ model to facilitate its Sizewell C decision and to inform funding for other new nuclear projects too. It has introduced the Nuclear Energy (Financing) Bill, which provides for a new regulated asset base model framework for new nuclear projects, before the UK parliament.
Graham Alty, who heads the nuclear team at Pinsent Masons, said: “Both large reactors and small modular reactors can deliver a significant percentage of our low carbon energy, which is needed for achieving the UK’s net zero commitments as part of a wider energy mix with renewable and other low carbon energy sources. With many existing nuclear reactors coming offline in the next decade this investment is needed simply to stand still. The delay in securing government commitments since the UK nuclear new build plans were announced over a decade ago will now mean there is a hiatus in our nuclear energy capacity, but that will be short compared to the expected design life of new plant, which can be as much as 60 years.”
“The government’s commitment to ‘seed’ fund investment in the replacement of our low carbon nuclear power capability through the regulated asset base is welcome. The level of investment is small relative to the overall value of assets that will be created and it will kick start investment by the private sector, who will be attracted by predictable returns over the long term,” he said.
EDF has said the Sizewell C plant, to be based in Suffolk in south-east England, will generate enough low-carbon electricity to supply six million homes, would support 70,000 jobs across the UK and rely on over 3,000 UK-based suppliers, and would avoid around nine million tonnes of carbon emissions each year compared to a gas-fired power station.
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