The government plans to resuscitate the UK’s nuclear energy ambitions by creating a financing model that could pile the upfront cost of the £20bn Sizewell C power plant on to householders’ energy bills before it starts generating electricity.
The energy secretary, Kwasi Kwarteng, set out legislation on Tuesday that would share the early construction costs with consumers, with the aim of reducing the UK’s reliance on overseas funding for nuclear projects by making them more attractive to domestic investors.
The long-awaited legislation could also pave the way for the government to take a direct stake in the Sizewell C nuclear plant by using tens of millions of pounds of public money during its risky development phase – replacing the China General Nuclear Power Group (CGN), which has a 20% share of the project.
Kwarteng said the existing financing scheme, which was used to back the Hinkley Point C nuclear scheme in Somerset, had led to “too many overseas nuclear developers walking away from projects, setting Britain back years”.
The legal backing for a new financing model is expected to help clear the way for the energy firm EDF to build Sizewell C in Suffolk after years of wrangling over how to fund the huge upfront cost of constructing a nuclear plant.
Under the new financing framework, known as a regulated asset base (RAB) model, EDF would start earning money – collected from energy bills – long before the reactor begins generating electricity.
The government said each household would not have to pay more than a few pounds a year extra on its bills to support the project during construction, but Sizewell C could save households more than £30bn over the facility’s lifetime.
The plant, which is still going through the planning process, could eventually power 6m homes, but has been plagued by opposition from local campaigners, concerns about costs and the involvement of state-owned CGN.
CGN is a minority partner in EDF’s Hinkley Point scheme, and is interested in building its own reactor at Bradwell-on-Sea in Essex. However, its involvement in the nuclear industry has faced growing worries over national security. The US has urged the UK to cut the company from its nuclear programme.
Kwarteng said: “We urgently need a new approach to attract British funds and other private investors to back new large-scale nuclear power stations.”
The government’s nuclear ambitions have foundered in recent years, with companies including the South Korea power utility company Kepco and Japan’s Hitachi and Toshiba abandoning plans to build in the UK.
Greg Hands, the minister for energy and clean growth, said the legislation would help the UK to build “the new nuclear power stations we need to ensure a resilient, low-carbon electricity system for future generations.
“This finance model will also support the UK’s thriving civil nuclear industry, which currently employs 60,000 in high-skilled jobs, and help create thousands more as we level up opportunities across the whole country.”