UK Advances With State Funds for EDF Sizewell Nuclear Plant

(Bloomberg) -- The UK’s ambitious nuclear plan took another step forward with state backing for Electricite de France SA’s Sizewell C nuclear power plant that will cost at least £20 billion.

The government will invest £700 million ($844 million) in the project or 50% of the development costs alongside EDF. It’s the first direct state funding of a new nuclear power project for more than three decades in Britain, according to a statement Tuesday. It comes a day after approval for a state-backed financing mechanism.

The UK wants to deliver eight new nuclear reactors this decade -- needing approval at a pace equivalent to one a year. A construction program of this scale hasn’t been achieved in the region since the 1970s in France, and doubts remain about the government’s ability to green-light enough projects by 2030 to meet that goal.

“New nuclear will protect Britain from volatile global gas markets and help keep bills under control for the country’s homes and businesses,” said Simone Rossi, chief executive officer of EDF’s UK business. 

On Monday, Business Minister Grant Shapps signed off on the regulated asset base model, the first step toward finding private investors for the project. The model has been used for major infrastructure projects such as Heathrow’s Terminal 5 and the Thames Tideway Tunnel.

Adding new nuclear capacity is key to Britain’s plans to eliminate carbon emissions from its power grid in the coming years. Nuclear power can offer a steady, predictable supply of low-carbon power that can serve as backup for the rapidly expanding fleet of wind farms.

Sizewell’s predecessor, Hinkley Point C, is the first British nuclear power plant to be built in decades. It’s costing more than expected and taking longer to build than planned, stoking concerns about whether the government is right to rely so heavily on the technology.

Once Sizewell C reaches financial close, both the government and EDF will hold a 20% stake with private investors making up the rest.

Shapps also committed to taking forward the British Energy Security Bill, after it was blocked by his predecessor Jacob Rees-Mogg in September. 

(Updates throughout with detail from government.)

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