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The UK has ended years of uncertainty over the future of its nuclear industry by pledging £11.5bn of new state funding for the Sizewell C project in Suffolk, taking the total taxpayer investment in the site to £17.8bn.
Chancellor Rachel Reeves will announce the record public investment in nuclear energy on Tuesday, telling attendees at the GMB Congress that she is ending “years of delay” over Sizewell, which will support the creation of 10,000 jobs.
Although Reeves has had to make tough decisions in the government’s spending review on day-to-day departmental budgets, she was able to find the extra billions for Sizewell C through a change to her fiscal rules. This has made £113bn available for extra capital spending across government, funded by borrowing.
The move marks a return to significant state funding for nuclear energy after the UK chose the private sector to finance and build its last project, Hinkley Point C in Somerset, which is heavily delayed and over budget. The previous record public investment in nuclear energy was £2bn for the Sizewell B plant in 1987, or £7bn in today’s prices.
The UK government already has a partnership with French state-owned energy group EDF, which has kept a 15 per cent stake in Sizewell C. The pair are now seeking financial commitments from several other investors before they can sign off a “final investment decision”, expected next month during an Anglo-French summit in London.
The chancellor will promise £14.2bn of taxpayer funding for the 3.2 gigawatt plant over the current parliament, including a £2.7bn commitment she previously made in the autumn Budget. The Treasury had already committed £3.6bn over the past two years.
EDF has said the final investment decision will depend on securing private investment and on whether it can make its expected return on capital, but Simone Rossi, the company’s UK chief executive, said the project would benefit the UK’s “energy security and economic growth”.
Private investors expected to bid for stakes in Sizewell C include Canadian pension fund CDPQ, Amber Infrastructure Partners, Brookfield Asset Management, pension fund USS, Schroders Greencoat, Equitix, Centrica and insurer Rothesay. The total cost of the project could be close to £40bn by the time it is built, industry figures believe.
Ministers are encouraging the development of new nuclear power stations in the UK to provide future supplies of “baseload” electricity to balance the more intermittent supply of solar and wind power.
But no new nuclear plant has opened in the UK since 1995 and most of the existing ageing fleet — apart from Sizewell B — is set to be phased out by the early 2030s.
State-owned Great British Nuclear will soon announce the outcome of its competition to choose a company to start building a fleet of “small modular reactors”.
The government said it would also invest more than £2.5bn in nuclear fusion over five years in what it called a “record investment” in the nascent technology. Melanie Windridge, head of advisory group Fusion Energy Insights, praised the government for recognising the “economic value of developing fusion in this country”. The sum is slightly less than the US is spending on fusion and one-third of China’s annual investment on the technology.
Additional reporting by Tom Wilson