UK’s nuclear power station plan to squeeze out Chinese money

Ministers have moved to cut China out of involvement in Britain’s nuclear power sector.

The Wylfa nuclear power station in Tregele, Anglesey. Britain is determined to build more nuclear power stations, but without Chinese funding. Picture: Getty Images.

Government ministers have moved to cut China out of involvement in Britain’s nuclear power sector with a new funding model that will place the risk of future projects on to consumers.

Under plans announced by Kwasi Kwarteng, the Business Secretary, investors in new nuclear power stations will see a return on their money before the plants are even built.

The move will effectively mean that consumers take on the risk of delays and cost overruns to projects and will start paying for the new plants through their bills before the reactors are built.

Ministers insist that it will make nuclear power stations easier to finance and cheaper in the long term. The decision will also allow the government to force out the Chinese state-owned CGN Group from its involvement in the $US20bn Sizewell C nuclear plant in Suffolk, England. CGN has a 20 per cent stake in the project that is due to be built by the French power firm EDF. However, ministers have refused to give the go-ahead to the plan because of the Chinese involvement.

It is hoped that by creating a new lower-risk funding mechanism EDF will be able to find new investors and remove the need for Chinese finance.

Ministers are concerned that Britain needs more nuclear projects to meet its carbon reduction targets. The country’s seven nuclear plants provide about 17 per cent of its electricity needs but this will fall by almost half by 2024. Further plants are due to shut between then and 2030.

The government has promised a funding decision on at least one new nuclear power station by 2024 but Mr Kwarteng is in favour of building two.

Under the new funding model, called the Regulated Asset Base, investors such as pensions funds provide the upfront capital to get a project under way. Investors receive a return on their capital while the project, which can take more than a decade, is built. The Business Department said in the case of a new nuclear power plant this would be paid for via consumers’ electricity bills, adding about £1 ($1.83) a month to the cost of power.

But ministers have claimed that over the total lifetime of the project of about 60 years it would lead to lower bills and a total saving for consumers of more than £30bn because the investment would be less risky and therefore attract lower rates of interest.

Any cost overruns would, however, be borne by the taxpayer. Government sources insisted this was necessary because there were few companies large enough to take on these risks. “Part of the reason that we’ve failed to build more than one nuclear power plant in this country is because there are so few global companies that have the balance sheets that can take on such risks on a single project when there will be no return for at least ten years,” they said. “This system opens nuclear up to many new investors and brings down the cost of the projects to consumers.”

It is understood that the government also sees it as the only way to remove Chinese investment in Britain’s nuclear industry and unwind a deal struck by then prime minister David Cameron in 2015. Under that agreement the Chinese were to fund the Hinkley Point C power station in Somerset and Sizewell and then install their own reactors at the Bradwell station. Ministers have already vetoed the Bradwell project.

The Times