The money, technically an option fee not a grant, will be used to keep the project alive and, it is hoped, to attract further financing from private investors.
Sizewell C does not yet have full government approval but ministers are committed to reaching a final investment decision on at least one large-scale nuclear power station this parliament. Negotiations between the government and Sizewell C project developer, EDF, have been ongoing since last year.
If Sizewell C gets the nod, the government will be reimbursed its £100m option fee with a financing return, either in the form of either cash or an equity stake in the project. If the project stalls, then the government would ask for either the Sizewell C company shares or the Sizewell C site. If EDF is unable to provide these assets as requested by government, the money will be refunded by EDF together with a financing return.
Business and energy secretary Kwasi Kwarteng said: “In light of high global gas prices, we need to ensure Britain’s future energy supply is bolstered by reliable, affordable, low carbon power that is generated in this country. New nuclear is not only an important part of our plans to ensure greater energy independence, but to create high-quality jobs and drive economic growth. The funding announced today will further support the development of Sizewell C during this important phase of negotiations as we seek to maximise investor confidence in this nationally significant project.”
EDF Energy chief executive Simone Rossi said: “We’re very pleased that the government is showing its confidence in Sizewell C which, if approved, will lower energy costs for consumers and help to insulate the UK from global gas prices. Together with our own investment, these funds will allow us to continue to move the project towards a financial investment decision.”
He added: “Sizewell C will benefit from being a near replica of Hinkley Point C in Somerset which is more than five years into construction and making great progress in the challenging context of the Covid pandemic. Sizewell C will provide a huge economic boost to East Suffolk where it already enjoys the support of most local people. It will also bring new opportunities for thousands of nuclear supply chain companies up and down the country.”
The announcement comes as the Nuclear Energy (Financing) Bill passes through Parliament. This will enable a regulated asset base (RAB) funding model framework for new nuclear projects, similar to how the Thames Tideway tunnel is being funded.
The government reckons that RAB could lower the cost of each new large-scale nuclear power projects by more than £30bn, compared to the existing contracts for difference model.
Unite the union, which represents workers throughout the construction and energy sectors, cautiously welcomed the government’s announcement. General secretary Sharon Graham said: “This is a step forward but the government needs to take the handbrake off when it comes to the development of new nuclear power stations. The government needs to sit down with EDF now, not later in the year, and agree a funding model that allows Sizewell to start without any further delay. If such a funding model requires government support, then it should be given.
“Any further delay in bringing forward the final decision on building Sizewell will be disastrous, as the vital skills that have been learned and developed at Hinkley Point, could be lost and fail to transfer to the new project.”