The British government threw its weight behind nuclear power on Tuesday, saying it will back a major new generating plant on the coast of the North Sea northeast of London.
The government said it would invest 700 million pounds ($839 million) for a 50 percent stake in the plant, known as Sizewell C. EDF, the French state utility, which will construct the plant, will hold the rest.
The deal squeezes out a Chinese state-owned company, China General Nuclear, which had owned 20 percent of the project. CGN received an undisclosed sum for its share, reflecting its value and representing a commercial return on development work to date, the British government said.
The deal amounts to another blow to Britain’s once warm business relationship with China. Britain courted Chinese investment over the last two decades, and the agreement to invest in Sizewell C was a centerpiece of a visit to London in 2015 by President Xi Jinping of China with the British prime minister at the time, David Cameron. Relations, though, soured over Beijing’s crackdown on Hong Kong and other developments.
The British government is now wary of Chinese involvement in sensitive areas like nuclear power and telecommunications, worrying that the presence of Chinese companies could lead to security risks.
On Monday, Prime Minister Rishi Sunak underscored this shift, saying the “golden era” in relations with China was over. Britain has for some time been maneuvering to end Chinese involvement at Sizewell C.
The British government and EDF, which has reduced its share to 50 percent from 80 percent, also want to attract investors to the project, which is expected to cost £20 billion or more. A stake held by a company controlled by the Chinese government might have complicated that task.
China General Nuclear continues to be an investor in the only major British nuclear power station under construction, at Hinkley Point in southwest England. It also has long-held plans to build a Chinese-designed plant at some point at Bradwell, not far from London. That proposal, given the shift away from Beijing, now seems highly unlikely.
Britain is clearly going 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 boost the amount of electricity generated from nuclear power and other sources like wind in order to reduce dependence on natural gas, now the largest source of power, whose volatility has pushed up electricity prices. However, construction has not yet begun at Sizewell C, and it will require a decade or more to make a difference.
The government’s plan is to attract capital to the nuclear industry from asset management firms and other financial market players. To make the investment attractive, the government would allow developers to recover costs from bill payers as the projects progressed.
The government portrayed Sizewell C as the first of a “pipeline” of new nuclear plants that would “enable the delivery of clean, safe electricity over the decades to come.” The plant would provide enough power for about six million homes, the government said.
Analysts, though, said the announcement on Tuesday might be only a step on what could be a long and fraught journey. The recent experience of building nuclear plants in Western Europe has been plagued by long delays and cost overruns. Hinkley Point C, similar in design to Sizewell C and being constructed by EDF, is years behind schedule.
“Expect severe delays, significant cost overruns and a serious lack of skilled workers,” said Franck Gbaguidi, a senior analyst at Eurasia Group, a political risk firm.
EDF has said it would leverage that experience and the trained work force at Hinkley Point to reduce costs at Sizewell C. Mr. Gbaguidi, however, said EDF might struggle because it was “currently overwhelmed with existing and planned projects in France.”
Indeed, major problems at EDF’s nuclear stations in France have reduced their power output at a time when they are needed to buffer the effects of Russia’s cutoff of gas to Europe.
It may help that nuclear power, long shunned by environmentalists and investors because of the toxic waste the plants produce and the risks of catastrophic accidents, is enjoying something of a revival in Europe. Despite their problems, nuclear plants are a route to generating large amounts of emissions-free electric power.
Still, the British government is facing increasing concerns about having sufficient electric power in the future. Britain’s nuclear plants, which produced about 16 percent of its electricity over the last year, are gradually being shut down because of age.
Stanley Reed
Source link
