Part 1 of 2 Parts
U.K. ministers are considering a deal that could end China’s project to build a twenty-eight-billion-dollar nuclear power plant on the Suffolk coast. Instead of accepting Chinese investment, they are considering the investment of tens of millions of dollars of taxpayer money. There are serious concerns that this could raise geopolitical tensions.
The U.K. government could make an announcement as early as next month to purchase a stake in the Sizewell C nuclear power plant project. They would be joining the French state-backed power company EDF which already has a stake in Sizewell C.
The likely result of such an announcement would be that the China General Nuclear (CGN) state-owned company would no longer be allowed to participate in the project. CGN currently holds a twenty percent stake in the Sizewell C project.
There is wide concern among analysts that such a change in the international Sizewell C project could inflame political tensions between some of the current participants involved in the project. International tensions have already been raised by the U.K. decision to join the AUKUS nuclear submarine project with the U.S. and Australia. This new trilateral arrangement replaces a contract that Australia had with France to supply a dozen conventionally powered submarines. The participants in the AUKUS say that the agreement is designed to counteract China’s recent military expansion. CGN is backed by the Chinese government. The huge nuclear company is also supplying critical funding for the EDF Hinkley Point C nuclear power station currently under construction in Somerset.
The Sizewell C project is still in the planning and development stage. The power generated by Sizewell C would be able to power about six million homes. The project has been plagued by opposition from local anti-nuclear activists, concerns over the ultimate costs and the involvement of China in the project.
The U.S. government has been applying pressure to the U.K. to end Chinese involvement in the construction and maintenance of U.K. nuclear power plants. The U.S. has blacklisted CGN, expressing fears that their involvement is a threat to national security. The U.S. has also accused China of stealing military technology. China has denied such claims. The former U.S. Secretary of State Mike Pompeo urged the U.K. to choose sides in the competition to develop nuclear technology. He was quoted as saying that the U.S. “stands ready to assist our friends in the UK with any needs they have”.
U.K. officials and EDF have been discussing plans for a new arrangement for the Sizewell C project. The new plans call for the U.K. government to purchase a stake in a new development company that would shepherd the Sizewell C project though the various stages of planning and bureaucracy, sharing the costs with EDF.
Private sector investors such as the insurance funds L&G and Aviva would then be courted to join the project at a later stage in return for a government-backed funding model called the regulated asset base (RAB), diluting the taxpayer and EDF ownership share. Legislation on RAB funding is due to move through Parliament next month. This is the same model used to fund airports such as Heathrow and utilities such as water companies.
Please read Part 2 next