UK households face energy bills surcharge to fund nuclear plants. Ministers plan legislation for new financing model to underpin building of £20bn Sizewell C reactor. This model would mean that energy bill payers start contributing towards the cost of the plant at Sizewell in Suffolk long before it generates any electricity. Ministers aim to unveil legislation in the autumn that would enable Sizewell C, a £20bn nuclear power plant, proposed by France’s EDF for England’s east coast, to go ahead through a financing model called the regulated asset base, said several people briefed on the government’s thinking. This model would mean that energy bill payers start contributing towards the cost of the plant at Sizewell in Suffolk long before it generates any electricity. The regulated asset base financing model is commonly used for large infrastructure projects in the UK, such as the Thames Tideway “super sewer” in London, because it cuts the cost of capital, but it has yet to be applied to complex nuclear power stations. Under the model, owners of a power station could add chunks of the value of a partly built plant to what would be its regulated asset base in stages during the risky construction phase. They could then charge an agreed regulatory return on this value to UK households through their energy bills, in a move designed to cover financing costs. UK ministers entered formal negotiations with EDF over the financing of Sizewell C in December. The government said at the time that consideration would be given “to the potential role of government finance in construction, provided there is clear value for money for consumers and taxpayers”. Stephen Thomas, emeritus professor of energy policy at the University of Greenwich, said he imagined that the government would have to take a “strategic stake” in Sizewell C “as a signal to investors that this won’t be allowed to collapse, and ditto EDF”. It is not yet clear what role CGN will play in Sizewell C. CGN is financing 20 per cent of the development costs of the Suffolk plant alongside EDF but some Conservative MPs are opposed to Chinese involvement in critical UK infrastructure. CGN declined to comment.
FT 7th July 2021 read more »