The UK government is making it easier to invest in nuclear power stations, lowering the table stakes with a new financing model which they hope will attract local private investors in place of overseas developers.
The announcement on Oct. 26 does not mention the government’s growing discomfort over the involvement of a Chinese state-backed developer in building its flagship £20 billion ($27.5 billion) nuclear reactor.
But the new financing model, which shifts the financial risk to consumers, provides a mechanism to now squeeze out CCP-backed CGN from its 20 percent stake in Sizewell C without invoking national security laws that would likely crank up tensions with Beijing.
The current funding model means that only international corporations with deep pockets can afford the risk and time scale of investing in the multi-billion pound power plants.
“The existing financing scheme led to too many overseas nuclear developers walking away from projects, setting Britain back years,” said Business and Energy Secretary Kwasi Kwarteng in a statement. “We urgently need a new approach to attract British funds and other private investors to back new large-scale nuclear power stations in the UK.”
That new approach adopts the same method as used for other large-scale infrastructure projects, such as water, gas, and electricity networks, known as the Regulated Asset Base (RAB).
Recent examples include the Thames Tideway Tunnel and Heathrow’s Terminal 5.
The scheme allows licensed investors to start passing on the costs to consumers during construction, although prices are set by a regulator.
The proposed Sizewell C plant is the only large-scale nuclear development project in the country and is currently 80 percent funded by France’s EDF and 20 percent by China’s CGN, under a deal struck six years ago. The UK government’s appetite for Chinese investment in infrastructure has since soured.
Last year the UK government reversed its position on Huawei, banning the Chinese telecoms giant from its 5G mobile phone network last year.
Under growing pressure from America and prominent Conservative backbenchers, the government has indicated a growing appetite to cut out CGN from Sizewell, but had no available mechanism under current rules.
With the new model, EDF will be able to forge new partnerships with alternative private investors before the business secretary finally signs off on the project.
The government claims that the new financing model is also ultimately cheaper and will save consumers £30 billion ($41.3 billion) in the long run.
“Currently, approximately 16 percent of the UK’s electricity generation comes from nuclear power and the RAB model will play an important role in attracting private investors to back new large-scale nuclear power stations, working alongside renewables on an increasingly low-carbon electricity grid,” said a statement from the Department of Business, Energy and Industrial Strategy.
Greenpeace UK chief scientist, Dr. Doug Parr, said that the model has already been used in the United States.
“The results were disastrous. It transfers huge financial risk from the builders to bill payers. In South Carolina, 18 percent of residents’ energy bills went to pay for a half-built reactor which has been abandoned and will never produce electricity,” he said.
Some analysts say that nuclear power is potentially more costly than other low-carbon alternatives.
Under the current model, energy giant EDF said it could deliver electricity for £89.50 ($123.21) per megawatt hour from its new Sizewell C nuclear site.
But some offshore wind projects that will come online in two years will charge as little as £39.65 ($54.59) per megawatt hour.
Nuclear proponents, however, say that the technology provides a zero-carbon source of electricity which is less volatile than wind or solar. When the wind is not blowing the turbines cannot produce anything, which requires something to take their place.
PA contributed to this article