UK Govt Invests £700M in Sizewell C Nuclear Reactors - 2022

Nuclear Power Industry

Neutron Bytes reported in late 2022 that in fulfilling a pledge made by former UK Prime Minister Boris Johnson, the UK government this week confirmed it will make a £700M ($839 million) equity investment in the Sizewell C twin 1600 MW nuclear reactors. EDF will also hold a 20% stake. Private investors are being sought to cover the remaining project equity. The two reactors will cost an estimated £20 billion and will be supplied by French state-owned enterprise EDF which will also serve as the engineering procurement and construction (EPC) lead for the project. It is expected to take up to a decade to complete both plants.

Funding for the project was signed off by Boris Johnson at the start of September in one of his last acts as prime minister and confirmed by the current Chancellor of the Exchequer Jeremy Hunt. Simone Rossi, CEO of EDF Energy said the go-ahead is “a big vote of confidence in Sizewell C and we are very excited the government is partnering with us to prepare the project for further investment.”

RAB Method for Funding

After several years of bureaucratic dithering, and wishful thinking about how much risk the private sector would accept for investing in a new nuclear power plant, the UK government has finally recognized reality.

UK Business Minister Grant Shapps is reported to have agreed to use the regulated asset base (RAB) model to fund the project which will be part of the process of attracting private investors for the project. Under the RAB model developers will be able to recover costs from rate payers as the projects meets development milestones and, presumably, recover any cost overruns as well.

Controlling Costs and Keeping Schedules

Sizewell C will replicate the design of the Hinkley Point C twin-EPR project with “more certainty over schedule and costs” according to EDF. Hinkley Point C has been under construction since 2018, but has experienced delays and higher costs since it broke ground. Some of the costs and delays are attributable to the impact of the COVID pandemic on the workforce.

On that issue, Franck Gbaguidi, a senior analyst at Eurasia Group, a political risk firm, told the New York Times, “Expect severe delays, significant cost overruns and a serious lack of skilled workers.”

The Times also reported that EDF said it would leverage that experience and the trained work force at Hinkley Point to reduce costs at Sizewell C. However, Mr. Gbaguidi, told the Times he was not impressed. He said EDF might struggle to achieve that result because it was “currently overwhelmed with existing and planned projects in France.”

He’s got a point. EDF is currently very busy and the firm’s new CEO Luc Remont has a lot on his plate. A few of the hot potatoes Remont must deal with include;

• The firm is completing a 1600 MW EPR at the Flamanville site. The project has experienced significant schedule delays and cost overruns. It is expected to be completed in 2023.
  
  
• An EPR in Finalnd has two busted feed water pumps. EDF is still trying to figure out why they broke down. The plant will be out of service until the problem is fixed.
  
  
• EDF is also struggling to bring back multiple operating nuclear reactors in the French fleet that are offline due to maintenance issues. Some won’t make it back online as winter sets in. Power shortages are forecast as a result.
  
  
• Separately, French President Macron has tasked EDF to build eight new EPRs in France and to break ground for the first unit by 2027. Mobilizing components, materials and a workforce along with everything else that is going on will make EDF one of the biggest construction related employers in France for the next two decades. Tens of thousands of jobs will ride on its success or failure.

China Out, Bradwell Cut Adrift

At the same time it is investing in Sizewell C, the UK government is removing China General Nuclear (CGN), a Chinese state-owned enterprise, from having a 20% equity stake in the project and is also cancelling its plans to build one and perhaps three 1000 MW PWR type Chinese Hualong One nuclear reactors at the Bradwell site. According to UK news media reports, the UK government paid China’s CGN £10 million to exit the project. CGN retains its equity position in the Hinkley Point C project which is under construction.

The Bloomberg wire service reported Prime Minister Rishi Sunak’s spokesman Max Blain was asked by reporters if the decision to remove Chinese involvement in Sizewell would mean no future involvement in the UK’s energy supply.

“We would need to make a judgment on what’s right for the UK I think we wouldn’t do anything to put UK security at risk and indeed our focus is on enhancing our energy independence,” Blain said.

No replacement developer has been named for Bradwell but former PM Johnson called for eight new full size reactors. With two new units at Sizewell, it is possible one of the remaining six could wind up at Bradwell. The UK also has to find and fund developers for the Wylfa, Oldbury, and Moorside reactor projects which represent the equivalent of seven full size reactors.

British Energy for British Homes

The London-based Nuclear Industry Association said the decision to invest in Sizewell C is “a defining moment” for Britain’s energy security and marks a big step forward for one of the UK’s most important green infrastructure projects. Business and energy secretary Grant Shapps said global gas prices are at record highs, caused by “Putin’s illegal march on Ukraine.” He said, “We need more clean, affordable power generated within our borders – British energy for British homes.”

In recent years the UK has generated about 15% of its power from its fleet of commercial nuclear power plants, but most are being retired this decade, with the last one – Sizewell B – due to close in 2035.