The UK government will announce its financial commitment for a new nuclear plant next week as the country attempts to boost its long-term energy security, according to three people familiar with the plans.
The decision, which will come as soon as Tuesday, is aimed at helping the government and Electricite de France SA seek private funding for the 3.2-gigawatt Sizewell C plant on the country’s east coast.
EDF will hold a board meeting early next week to sign-off on the plan after it was given the go-ahead by Prime Minister Boris Johnson and Chancellor Nadhim Zahawi, according to one of the people. A spokesperson for EDF declined to comment.
Soaring energy bills have only heightened pressure on the UK government to generate new sources of power generation, although it will take more than a decade before the new pair of reactors is ready.
A final investment decision, including whether the UK will take a 20% stake in the project, will be made early next year, the people said. The plant, which will also be part-owned by EDF, had an estimated price-tag of £20 billion at the start of the year, since when raw material costs have surged.
Barclays Plc and Rothschild & Co, who were hired to raise funds for the project, have spent the past months scoping interest, the person said. The government is expected to use a so-called regulated asset base model, which is supposed to encourage private investors and dilute the construction risk shouldered by the developer and taxpayers.
The project could prove to be a sticking point for the next government though, especially if front-runner Liz Truss becomes prime minister.
Simon Clarke, chief secretary to the Treasury and tipped to be Truss’s business secretary, warned Johnson and Zahawi that the costs of Sizewell C are “sufficient to materially affect spending and fiscal choices for an incoming government, especially in the context of wider pressures on the public finances,” according to a letter leaked to the Sunday Times.
But Kwasi Kwarteng, the current Business Secretary who’s expected to be made Truss’s Chancellor, is very supportive of the project. The nuclear plant is key to the UK’s ambitions to triple nuclear capacity by 2050, though won’t alleviate pressure on energy prices currently affecting ordinary Britons.