Household bills to fund Sizewell C

Ministers plan legislation for new financing model to underpin building of
£20bn Sizewell C reactor. This model would mean that energy bill payers
start contributing towards the cost of the plant at Sizewell in Suffolk
long before it generates any electricity. Ministers aim to unveil
legislation in the autumn that would enable Sizewell C, a £20bn nuclear
power plant, proposed by France’s EDF for England’s east coast, to go
ahead through a financing model called the regulated asset base, said
several people briefed on the government’s thinking. This model would
mean that energy bill payers start contributing towards the cost of the
plant at Sizewell in Suffolk long before it generates any electricity. The
regulated asset base financing model is commonly used for large
infrastructure projects in the UK, such as the Thames Tideway “super
sewer” in London, because it cuts the cost of capital, but it has yet to
be applied to complex nuclear power stations. Under the model, owners of a
power station could add chunks of the value of a partly built plant to what
would be its regulated asset base in stages during the risky construction
phase. They could then charge an agreed regulatory return on this value to
UK households through their energy bills, in a move designed to cover
financing costs. UK ministers entered formal negotiations with EDF over the
financing of Sizewell C in December. The government said at the time that
consideration would be given “to the potential role of government finance
in construction, provided there is clear value for money for consumers and
taxpayers”. Stephen Thomas, emeritus professor of energy policy at the
University of Greenwich, said he imagined that the government would have to
take a “strategic stake” in Sizewell C “as a signal to investors that
this won’t be allowed to collapse, and ditto EDF”. It is not yet clear
what role CGN will play in Sizewell C. CGN is financing 20 per cent of the
development costs of the Suffolk plant alongside EDF but some Conservative
MPs are opposed to Chinese involvement in critical UK infrastructure. CGN
declined to comment.

 FT 7th July 2021

 https://www.ft.com/content/d115c0bd-da17-4bbf-a070-b62b525c7fa1