The British government gave its backing to nuclear power on Tuesday, saying it would back a major new power station on the North Sea coast northeast of London.
The government has said it will invest 700 million pounds ($839 million) for a 50% stake in the plant, known as Sizewell C. EDF, the French state-owned company, which will build the plant , will hold the remainder.
The agreement ousts a Chinese state-owned company, China General Nuclear, which held 20% of the project. CGN has received an undisclosed sum for its share, reflecting its value and representing a commercial return on development work to date, the UK government has said.
The deal is a further blow to Britain’s once warm trade relationship with China. Britain has courted Chinese investment for the past two decades, and the investment deal in Sizewell C was a centerpiece of a 2015 visit to London by Chinese President Xi Jinping with Britain’s Prime Minister of China. era, David Cameron. Relations, however, soured over Beijing’s crackdown on Hong Kong and other developments.
The UK government is now wary of Chinese involvement in sensitive areas like nuclear power and telecommunications, fearing the presence of Chinese companies could pose security risks.
On Monday, Prime Minister Rishi Sunak highlighted the change, saying the “golden age” of relations with China was over. Britain has been maneuvering for some time to end Chinese involvement in Sizewell C.
The UK government and EDF, which has reduced its stake from 80% to 50%, also want to attract investors to the project, which is expected to cost £20bn or more. A stake held by a company controlled by the Chinese government could have complicated this task.
China General Nuclear continues to invest in Britain’s only major nuclear power station under construction, at Hinkley Point in south-west England. He also has long-standing plans to build a Chinese-designed factory at some point in Bradwell, not far from London. This proposal, given the remoteness of Beijing, now seems highly unlikely.
Britain is clearly heading in a different direction now, but one that could also prove complex. Jeremy Hunt, Britain’s Chancellor of the Exchequer, said in a statement that the government’s decision “represents the biggest step on our journey to energy independence”.
The government wants to increase the amount of electricity generated from nuclear power and other sources like wind to reduce dependence on natural gas, now the biggest source of energy, whose volatility has driven up electricity price. However, construction has yet to begin at Sizewell C, and it will take a decade or more to make a difference.
The government’s plan is to attract capital to the nuclear industry from asset management companies and other financial market players. To make the investment attractive, the government would allow developers to recover costs from bill payers as projects progress.
The government has described Sizewell C as the first in a ‘pipeline’ of new nuclear power stations which ‘would deliver clean and safe electricity for decades to come’. The plant would provide enough electricity for around six million homes, the government said.
Analysts, however, said Tuesday’s announcement could be just one step on what could be a long and rocky journey. The recent experience of building nuclear power plants in Western Europe has been marked by long delays and cost overruns. Hinkley Point C, similar in design to Sizewell C and built by EDF, is years behind schedule.
“Expect significant delays, significant cost overruns and a severe shortage of skilled workers,” said Franck Gbaguidi, principal analyst at Eurasia Group, a political risk firm.
EDF said it would leverage this experience and the skilled workforce at Hinkley Point to reduce Sizewell costs CM Gbaguidi, however, said EDF may struggle because it is “currently overwhelmed by existing and planned projects in France”.
Indeed, the major problems of EDF’s nuclear power plants in France have reduced their electricity production at a time when they are needed to cushion the effects of the gas cut from Russia to Europe.
It may help that nuclear power, long shunned by environmentalists and investors because of the toxic waste the plants produce and the risk of catastrophic accidents, is experiencing something of a revival in Europe. Despite their problems, nuclear power plants are a way to generate large amounts of electrical power without emissions.
Yet the British government is increasingly concerned about having enough electricity in the future. Britain’s nuclear power stations, which produced around 16% of its electricity in the last year, are being phased out due to their age.
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