The UK’s nuclear energy programme is being revitalised with a rebooted funding model to shut out Chinese companies and replace its ageing power facilities.
Business secretary Kwasi Kwarteng has announced The Nuclear Energy (Financing) Bill ahead of the Budget today.
The UK will now utilise the Regulated Asset Base (RAB) to front-load costs to consumers during the construction phase of future projects, and to deepen the pool of private backers such as British pension strategies, insurers and institutional investors.
The government wants to ensure construction projects get off the ground, while also reducing the country’s reliance on overseass funding.
RAB has been used to finance previous infrastructure projects such as the Thames Tideway Tunnel and Heathrow Terminal 5.
The move will empower Kwarteng to oust China’s state-owned CGN from future energy schemes.
It could also allow him to remove the company from the proposed £20bn Sizewell C nuclear plant in Suffolk.
The proposed plant is still subject to planning approval.
Until the announcement of the bill, the government had not decided how to pay for it.
CGN currently has a 20 per cent stake in the project, with France’s EDF owning the remaining 80 per cent.
If the UK deepens its domestic pool of investment, Kwarteng would be able to take CGN out of the picture while making up the shortfall in costs.
Kwarteng said: “Our new model is a win-win for nuclear in our country. Not only will we be able to encourage a greater diversity of private investment, but this will ultimately lower the cost of financing new nuclear power and reduce the costs to consumers and businesses.”
The announcement follows the unveiling of the government’s net zero strategy which set out £120 million towards nuclear projects through the Future Nuclear Enabling Fund.
The government claims the RAB model could save consumers more than £30bn over the lifetime of a nuclear project such as Sizewell C compared to previous funding models.
The Nuclear Industry Association told the BBC it would add less than £1 per month to consumer’s energy bills over the course of the project’s construction.
Currently, 17 per cent of the UK’s electricity generation comes from seven nuclear power stations, but Hinkley Point C in Somerset is the only new plant under consturction.
Together, Hinkley and Sizewell C are expected to produce 14 percent of the UK’s current electricity needs.
But they are unlikely to be operational until the late 2030s.