Boris Johnson is expected to confirm this week that the British government will take a 20 per cent stake in a new nuclear power station planned for Sizewell in Suffolk.
The outgoing prime minister’s move is designed to send a signal to investors that the government is serious about reviving efforts to build a new generation of nuclear power stations after years of delays.
French state-owned EDF, the developer of Sizewell C, is set to take another 20 per cent stake as part of an agreement with ministers earlier this year to remove a Chinese state-backed energy group from the project.
The amount of money put up by taxpayers is still subject to final negotiations and would depend on the balance of equity and debt in the project. EDF has put the cost of building Sizewell C at £20bn in 2015 prices.
The government has hired Barclays to lead a search for private investors for the remaining 60 per cent stake in the 3.2GW plant that would be built adjacent to an existing power station on England’s east coast and would generate enough electricity for about 6mn homes.
The investment decision by the government was originally expected later this year. But people familiar with Johnson’s thinking said the move to accelerate the decision on Sizewell C before he leaves office was “him trying to leave a legacy of having made something happen”.
The expected early announcement on Sizewell comes despite Johnson’s insistence that he would have to leave any large spending decisions to his successor after announcing he would step down in early July. The winner of the leadership race will be announced on Monday.
Government sign-off on the Sizewell project, which would take about a decade to build, would not help address the immediate energy crisis. Johnson’s successor will have other key energy decisions to make, including how to help households with soaring energy bills and long-term initiatives such as approving the first oil and gas exploration licensing round since 2019/20.
Other shorter-term measures include the reopening of Rough, Britain’s largest gas storage site that was effectively closed in 2017. The oil and gas regulator gave final approval for its reopening this week but utility Centrica, which owns the facility, still needs to reach a financing mechanism with the UK government before it can start reinjecting gas into the facility ahead of the winter.
Before its 2017 closure, Rough was able to meet up to 12 per cent of the country’s daily peak gas demand in winter for 75 days when full. But Centrica is proposing to reopen the 37-year-old facility in phases. Kathryn Porter, an energy analyst at Watt-Logic, has said that even operating Rough at a quarter of its previous capacity “might be ambitious” due to its age. She estimated Rough could potentially meet 12 per cent of peak demand over a 19-day period if it could be quarter-filled.
Business secretary Kwasi Kwarteng granted planning approval for Sizewell C in late July, overriding the advice of the independent Planning Inspectorate in the process. The plant is based on the same design as the one under construction at Hinkley Point, which is the first new nuclear power station to be constructed in Britain since 1995. Previous governments tried but failed to persuade investors to build other projects at sites including Wylfa in north Wales.
The Hinkley Point project has been beset by cost overruns, with its price tag ballooning to an estimated £26bn from £18bn when it received the go-ahead in 2016.
The British government is hoping to attract investment in Sizewell C from pension and infrastructure funds based on a “regulated asset base” model, which is already used to finance the building of water, gas and electricity networks.
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