Beijing-run giant seeks 49% holding in eight plants.
The Chinese government is in early-stage talks to buy a big minority stake in Britain’s fleet of nuclear power stations, The Sunday Times can reveal.
China General Nuclear (CGN), the country’s state-run nuclear giant, is understood to have made an approach about acquiring a share of up to 49% in the eight power stations, which generate a fifth of the nation’s electricity. The stake, worth up to £4bn, is being sold by Centrica, the parent company of British Gas, and the French giant EDF.
The move highlights China’s ambitions to become a global player in nuclear energy. It will present a huge challenge for Theresa May. The prime minister is deeply wary of granting the Chinese greater access to critical infrastructure and has initiated a new national security test on foreign takeovers.
China demonstrated its nuclear ambitions when CGN bought a third of the £20bn Hinkley power station being built in Somerset by EDF. That deal caused consternation in Westminster, with May insisting on a two-month review of security implications before signing off on it in September 2016.
Chinese efforts to buy a non-controlling stake in a fleet of existing power stations will post another big test. The revelation of Beijing’s interest is likely to provoke a storm in parliament due to fears over energy security and safety. However, sources insisted that China would not have operational control over the plants if the deal went ahead, adding that talks are at a very early stage.
Under President Xi Jinping, China has been on an aggressive drive to develop its nuclear power industry. Acquiring the stake of up to 49% would give it credibility and experience of owning operational power stations — potentially enhancing its credentials to build Chinese-designed reactors in Britain. CGN wants to install its own reactors at a new power station being built at Bradwell-on-Sea in Essex, about 30 miles east of London.
The eight nuclear power stations being targeted by the Chinese are dotted around Britain at sites including Sizewell in Suffolk, Dungeness in Kent and Hunterston in Ayrshire. Formerly known collectively as British Energy, they generate 8.9 gigawatts of electricity and supply about 20% of Britain’s electricity needs.
They were bought by EDF in 2008 for £12.5bn. The following year, Centrica took a 20% stake. The total business is valued more than £8bn on the books of Lake Acquisitions, its holding company, suggesting that a 49% share would be valued at about £4bn.
Centrica’s boss, Iain Conn, wants to sell its share by the end of 2020 under plans to focus on providing services and power to households and businesses. Cash-strapped EDF is considering cutting its 80% stake to 51%. It has hired Bank of America Merrill Lynch as an adviser.
The sale could attract interest from pension and insurance funds, although sources said the pool of bidders would be small because the stations have a limited lifespan. Conn also said last year: “There are very few buyers of nuclear assets acceptable to the government and EDF.”
CGN, EDF and Centrica declined to comment.
Source: The Sunday Times