Ministers are closing in on a deal that could oust China’s CGN from a new £20bn nuclear power station on the UK’s east cost, by selling its minority stake to institutional investors or floating it on the stock market.
Under the proposed plans, China’s state-owned CGN would be removed from the project after relieving its 20 per cent stake in the proposed Sizewell C 3.2 gigawatt nuclear plant in Suffolk.
Its stake would then be held by the UK government alongside French state-backed EDF, until it can be sold on to institutional investors, the FT reported, and ministers are also exploring the option to to float it on the stock market through an IPO.
EDF, which currently holds the remaining 80 per cent stake in Sizewell, is reportedly planning to use a financial model called a “regulated asset base” for the plant whereby household energy bills would begin contributing towards the cost of the plant, before it starts generating electricity.
Chinese state-backed power giant CGN also has a stake in EDF’s Hinkley Point C power station in Somerset.
It comes after CGN’s involvement in the UK’s nuclear projects has fallen under scrutiny in the wake of the Huawei saga, where the UK government banned the telecoms giant from the 5G mobile phone network last year.
The government’s business department told City AM that CGN is a “valued partner” at both the Hinkley Point C and Sizewell C plants “up until the point of the government’s final investment decision”.
The department also confirmed it believes that a regulated asset base, as per EDF plans, is a credible model for funding nuclear projects, as it should reduce the cost of finance and thereby reduce consumer bills,” but that the government recognises the need for legislation with regards to its use on nuclear projects.
“Negotiations are ongoing and no final decision has been taken,” a spokesperson added.
The Sizewell plant is still going through its planning and development stages, but could eventually power around 6m homes.
But the project has already faced a number of setbacks, including opposition from local campaigners as well as concerns about its expense and China’s involvement.
In selling the stake, the government would be scrapping its own deal with CGN, made in 2015, which would have seen the Chinese nuclear power group fund Sizewell and Hinkley power station and then install its own reactors at a third site at Bradwell in Essex.
It follows similar reports from the FT in July, who cited sources familiar with the plans, that Britain was exploring ways to remove China’s state-owned nuclear energy company from all future power projects in the UK.
EDF declined to comment on the reports, and CGN did not respond to a request for comment.