Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
UK ministers have made contingency arrangements to fund the Sizewell C nuclear power project in case a final agreement with potential private investors is delayed by as much as two years, officials have admitted.
A £5.5bn subsidy scheme set up in August to support the construction of Britain’s next nuclear power station at Sizewell in Suffolk envisages a scenario where there is no agreement with private sector investors until mid-2026.
The timeline for Sizewell C is already running late.
The last Conservative government had hoped to sign off the final investment decision (FID) by July this year but the process was disrupted by the UK general election. The government then set an end-of-year target date.
“The £5.5bn budget is based on cost estimates to fund the project until the current projected FID date with a contingency in case of delays to a FID until June 2026,” the Department for Energy Security and Net Zero said in a September letter to a campaign group Stop Sizewell C.
The UK government and French state-owned energy company EDF are expected to fund about 20 per cent each of the £20bn-plus project, with the other 60 per cent needed from institutional investors.
Several industry and Whitehall figures said no deal was expected before spring 2025 as ministers tried to nail down firm commitments from investors for the 3.2-gigawatt project, capable of powering millions of homes.
Francois Xavier Basselot, managing director for Europe and the Middle East at Egis, an engineering consultancy involved in the design of Sizewell C, said the government had told partners that there would be no formal announcement until 2025.
“They are obviously delaying the final investment decision but they are clearly committed to seeing it through. We will wait and see in Q1 next year,” he said.
The UK government insisted an agreement with investors could still be reached this year.
Private investors in talks with the government over Sizewell have included Centrica, Schroders Greencoat, Emirates Nuclear Energy Corporation and Amber Infrastructure Group, according to people familiar with the matter.
However, the final balance between the different investors was still being discussed and some had become more wary after the troubles faced by investors in the UK’s water sector, the people said.
Nuclear power has long been an unattractive sector for many investors due to factors ranging from cost overruns to the remote risk of a nuclear accident.
New nuclear power is seen as critical to the UK government’s plans to slash carbon emissions as it can provide a steady supply of electricity, unlike intermittent solar and wind.
Yet only one nuclear power station is under construction in Britain, the Hinkley Point C project in Somerset, which is running several years late with a ballooning price tag of up to £46bn.
EDF is the majority investor in Hinkley Point C, with a 66.5 per cent stake, while CGN, a Chinese state-owned company, owns a 33.5 per cent stake.
Ministers and EDF argue Sizewell C should be cheaper and easier to build than Hinkley Point C as lessons will have been learned from that project.
The UK government has so far committed £2.5bn to help fund the early stage development of Sizewell C before a final deal with private investors.
It also announced up to £5.5bn in further support in August, with funding to be released in tranches and subject to approval.
All but one of the UK’s ageing fleet of existing nuclear power stations, owned by EDF with Centrica, are set to close down by the end of the decade.
An energy department spokesperson said there were no plans for any further delays at Sizewell C. “New nuclear power stations such as Sizewell C will play an important role in helping the UK achieve energy security and net zero,” they said.
“Subsidies with extended timelines are a standard contingency measure and in no way indicative of project timelines. There are no plans for a delay to Sizewell C, with discussions with potential investors ongoing, and our intention to deliver the project as quickly as possible,” they added.
But Alison Downes from Stop Sizewell C said ministers were “shoving public money” at the project without knowing its true cost.
“If Labour ministers have started waking up to the reality that Sizewell C cannot possibly help them decarbonise by 2030 this could explain why they are taking their time to make a final investment decision,” she said.
“However it could also indicate that the enormous, still-secret, cost and financing plans are causing considerable difficulties,” Downes added.
