By Sarah Young and Nina Chestney. LONDON, July 22 (Reuters)
Good new for energy technology advancement in the UK: the construction of a nuclear power plant, Sizewell C, has finally been approved. This announcement represents a strategic and political shift for the nation sources. The project will receive investment from major companies and is expected to influence discussions on the green transition throughout Europe. Learn more about it.
Construction of nuclear power plant guaranteed due to investments
Britain has secured investment for the Sizewell C nuclear plant from Canadian pension fund La Caisse, Centrica and Amber Infrastructure, enabling the government to give the final go-ahead on Tuesday for the 38 billion pound ($51 billion) project. Under the deal, the British state will be the largest shareholder in the project with a 44.9% stake, La Caisse will hold 20%, UK energy firm Centrica 15% and London-based Amber Infrastructure will take an initial 7.6%, joining France’s state-owned EDF which had already announced its 12.5% stake.
The decision to go ahead with Sizewell C in eastern England is another sign of a nuclear revival in Europe as several countries look to build new plants to replace ageing fleets, boost energy security and reach climate goals. The plant in Suffolk will be only the second new nuclear plant built in Britain in more than two decades. It is expected to create around 10,000 jobs during the peak of construction, and produce enough electricity to power around 6 million homes when built. EDF expects Sizewell C to be operational by around the mid to late 2030s. “Delivering next generation, publicly-owned clean power is vital to our energy security and growth,” UK finance minister Rachel Reeves said in a statement.
Sizewell will use a funding regulated-asset-base (RAB) model where companies building new plants would be paid during the construction phase, cutting down their development risk and allowing them to secure cheaper financing. The announcement of La Caisse as the second biggest shareholder comes as a surprise after months of speculation that Canadian investor Brookfield was in pole position to invest. The government said Sizewell C will add around one pound a month to consumer bills over the duration of the construction. It also said the plant could reduce the cost of a low-carbon electricity system by around 2 billion pounds per year on average when operational.
The financing model has received some criticism
The RAB model still faces resistance, even with its long-term benefits, and this, ultimately has to do with budget predictability. There’s concern about people’s energy bills, as delays and additional construction costs could impact them, as these costs could be passed on to consumers.
Critics of the RAB model, which has also been used to fund London’s Thames Tideway Tunnel project, say it could leave taxpayers liable for any cost over-runs and delays during construction and add costs to energy bills at a time when many people are already struggling. French state-owned EDF’s Hinkley Point C nuclear plant, currently under construction in Somerset, has been beset by delays and cost overruns, and is not due to start operating until about 2030.
The British government insists that the RAB model, despite criticism, is intended to guarantee the project’s stability and is a strategy to secure investors. The investment from La Caisse, the Canadian bank, is a good indication of the project’s economic viability, and is is believed that this could open the door to future agreements similar to this one.
Project security and prestige thanks to international participation
The Sizewell c project raises expectations that we will soon see more large-scale sustainability-focused projects like this. The presence of major international investors strengthens confidence in the potential of this nuclear power plant and signals a positive path towards a new global energy trend for the future.
GCN.com/Reuters