China and Hinkley

Posted: 27th July 2021

The flagship of Britain’s new nuclear power fleet is under threat as the

Government prepares curbs on Chinese involvement in critical national
infrastructure. Whitehall sources admitted last night that the £23bn
Hinkley Point C project underway in Somerset could be jeopardised by plans
to block China General Nuclear (CGN) from future UK projects. The Hinkley
reactor, Britain’s first in a generation, is being partially bankrolled by
CGN as part of a wider deal with French company EDF to replace the UK’s
aging nuclear plants. Under Government proposals which have not been
officially confirmed, CGN’s involvement in subsequent planned projects, in
Suffolk and Essex, would end. Government insiders said that there are
concerns this could disrupt the linked deal under which CGN is developing
Hinkley, where work is already significantly advanced. Ministers are
preparing to introduce legislation to Parliament that would allow nuclear
power developers to recoup costs from household bills. This could spark a
significant backbench rebellion from MPs concerned about China if CGN is
involved. Industry sources also suggested that EDF would find it easier to
court pension funds and other institutional investors without the political
risk of a major Chinese state partner. CGN owns about a third of Hinkley
Point C and has a 20pc development phase stake in Sizewell C, with an
option to participate in the construction phase. Its own reactor design for
Bradwell is going through UK regulatory approval, with CGN hoping it can
then export this technology more widely. The Times reported last night that
the Government is considering buying an equity stake in Sizewell C as part
of its moves to replace CGN, reversing a long-standing wish to keep nuclear
build off the Government balance sheet.

 Telegraph 26th July 2021

 Boris Johnson has been warned that Britain’s first new nuclear power
station in a generation could be put at risk if he pushes ahead with plans
to bar China’s state-owned energy company from building future plants.
Ministers are considering alternatives to the involvement of China General
Nuclear Power Group (CGN) in the £20 billion Sizewell C nuclear power
plant in Suffolk, including the government taking a multibillion-pound
equity stake. The government could also block the involvement of CGN in
other projects, such as plans for a new nuclear power plant at
Bradwell-on-Sea in Essex. However, a senior government source said that
ministers would have to “go cautiously” because China is a major
investor in Hinkley Point C in Somerset, which is due to be operational in
2026 and will become the first new nuclear plant for a generation.
“It’s very sensitive,” the source said. “If we push too hard on
Sizewell it could have wider implications.” Another source familiar with
the discussions said: “All the deals hang together. If you open up one of
the deals, you open all of them. It’s never going to be as simple as
‘pull out of Sizewell’. I’d be amazed if CGN didn’t say: ‘You
want us to put some more money into Hinkley Point? Well screw you.’ ”
CGN is thought to have invested about £4 billion in Hinkley Point C so
far, implying the Chinese company needs to invest close to the same amount
again to complete the deal. It also has engineers on site. Who would
replace it, should China take umbrage at being rejected elsewhere, is less

 Times 27th July 2021

 It was never very likely that the government would allow a Chinese
state-owned company to build a nuclear power station in Britain. So news
that it is now looking for ways to remove China General Nuclear Power Group
(CGN) from future nuclear projects hardly comes as a surprise. Under the
terms of a deal struck in 2015 CGN was to take minority stakes in two
French-led new nuclear power stations, Hinkley Point C and Sizewell C,
while taking a majority stake in a third, Bradwell in Essex, which would
use CGN’s own technology. This deal, first agreed by the coalition
government, was approved with only minor alterations by Theresa May after a
review concluded that Britain’s robust regulatory and technological
safeguards were sufficient to protect against any threats to national
security. Whether or not that assessment was right, the political context
has since changed. The mood in parliament, particularly among Conservative
MPs, has turned decisively against China, making it inconceivable that any
government could allow China to build such sensitive national
infrastructure. CGN was blacklisted from US government contracts in 2019
after being accused by the Trump administration of technology theft. That
has made it harder for France’s EDF to attract the infrastructure
investors that it needs to make Sizewell C financially viable. The risk is
that China does not take its rejection well and the entire three-part deal
unravels, with CGN withdrawing from Hinkley Point C in protest. That could
leave EDF with a further shortfall of up to £4 billion.

 Times 26th July 2021

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