The government said the new regulated asset base (RAB) model will give nuclear projects the financial support they need and attract private investment. It will see projects such as Sizewell C receive a regulated payment from electricity suppliers, helping them come to fruition.
The government set out its case for Sizewell C to receive funding under the model and launched a consultation on how projects would receive RAB financing.
Under the previous mechanism to support new nuclear projects – the contracts for difference (CfD) scheme – developers had to finance the entire construction cost of a nuclear project up front, and only began receiving revenue when the station starts generating electricity. This model led to the cancellation of recent potential projects, such as Hitachi’s project at Wylfa Newydd in Wales and Toshiba’s at Moorside in Cumbria.
Under the new RAB scheme, private investors receive greater certainty through a lower and more reliable rate of return in the early stages of a project, lowering the cost of financing it, and ultimately helping reduce consumer electricity bills.
The government said that overall, consumers are expected to save more than £30bn (€34.5bn) over the project’s lifetime on each new large-scale nuclear power station compared with existing funding mechanisms.
The government said the new method of funding nuclear projects will help it realise its ambitions for a British nuclear renaissance, with plans to approve up to eight new nuclear reactors by 2030, with more plants to follow after 2030 – eventually boosting nuclear capacity from around 7 GW today to 24 GW by 2050.
A decision on whether to grant Sizewell C planning consent was last month delayed until 8 July.
The Guardian newspaper reported that the government has bought an option to take a 20% stake in Sizewell C in a move that could ease China’s state nuclear company China General Nuclear (CGN) out of the project.
Ministers took a £100m option to invest in Sizewell C’s holding company in January and said this week it would convert that into equity if the project reaches a final investment decision.
Sizewell C ‘Will Power Six Million Homes’
Sizewell C will have two France-supplied EPRs producing 3.2 GW of electricity, enough to power the equivalent of around six million homes. It would be a copy of the two-unit Hinkley Point C under construction in Somerset.
The two Hinkley Point C units are the only commercial nuclear plants being built in the UK. EDF’s share in the project is 66.5% with CGN holding 33.5%.
EDF is currently the only developer planning new nuclear projects in the UK, apart from CGN, whose involvement in the sector ministers are believed to want to block over security concerns. CGN has been preparing to use its Hualong pressurised water reactor, or UK HPR1000, for Bradwell B in Essex, southeast England.
The UK government recently announced that up to eight more nuclear reactors could be delivered on existing sites as part of a “bold” new energy strategy which aims to boost UK energy independence, wean the country off expensive fossil fuels and tackle rising prices.
The UK generates about 15% of its power from its fleet of 11 commercial nuclear power plants, but most are being retired this decade, with the last one – Sizewell B – due to close in 2035.
Without new build, that would leave only the two new EPR plants under construction at Hinkley Point C in operation. Mr Johnson has already suggested he might consider a 20-year operating extension for Sizewell B.
