Britain needs a nuclear renaissance to help deliver a low cost, clean and secure electricity system. New nuclear will result in reliable, abundant energy, while driving down consumers’ bills and boosting economic growth.
Sizewell C is a crucial project for delivering against these objectives. As a near replica of the Hinkley Point C project under construction in Somerset, Sizewell C is our country’s next most mature new nuclear project under development, which can benefit from the design certainty and construction learnings that have been developed at Hinkley Point C.
Sizewell C would generate reliable, low-carbon power for 6 million homes—equivalent to 7% of the UK’s electricity—for six decades or more. Beyond keeping the lights on, in each year of operations it could avoid nine million tonnes of CO2 emissions, moving the UK forward on our path to Net Zero.
It would also act as a vehicle for levelling up nationwide, through the huge opportunities for jobs and skills provided by nuclear projects. Sizewell C Ltd—“the company”—has plans for 70% of the construction value to go to UK businesses, and to bring £4.4 billion of investment to the east of England economy during construction. As well as creating and supporting thousands of jobs in Suffolk and nationwide, the company also plans to create 1,500 apprenticeships, helping to build Britain’s nuclear workforce of the future.
In short, Sizewell C represents the next step in meeting our longer-term ambition to provide up to a quarter of the UK’s electricity from homegrown nuclear energy by 2050.
That is why this Government made a historic investment of c.£700 million in Sizewell C (Holding) Ltd—“SZC HoldCo”—last November, joining EDF—our valued partner as the operator of the UK’s existing nuclear fleet, and the lead developer of Hinkley Point C—as a co-shareholder.
Since then, the Government has worked with EDF and the Company to continue the project’s development, and to establish the best conditions for successful delivery. As a shareholder in SZC HoldCo, this summer we have made available £511m of further funding, supporting site preparation and investing in the local community.
We are now seeking to progress to the next stage.
As highlighted in my predecessor’s written ministerial statement in November 2022, we intend to use the regulated asset base (RAB) model to enable a private equity raise, with the aim of bringing new expertise and experience into the company. In our assessment, this approach has true potential to result in a good value for money outcome for consumers and taxpayers, with the RAB structure incentivising the company and private investors to drive efficient construction on schedule, and, in due course, ensure efficiency in operations.
This summer, the Government and the company undertook a market testing process, with a cross-section of potential investors, in order to understand their views on the project, financing approach and how they could assist in project delivery.
Having received positive feedback from this market testing process, and following agreement with our co-shareholder EDF, the Government and the Company are commencing pre-qualification for potential investors, as the first stage of an equity raise process.
To ensure that investment benefits the company, consumers and taxpayers, the intention is to secure investment from qualified organisations able to take a meaningful ownership stake, such that new investors’ incentives are aligned with other shareholders and, importantly, they are able to substantively and positively influence company governance and delivery over the construction period.
Investment is being sought from those with significant experience in the delivery of major infrastructure projects, especially in large-scale nuclear or other complex energy or infrastructure projects. Drawing from this experience would ensure Sizewell C benefits from expertise in areas such as project risk management, cost control, and instilling projects with a culture of commercial focus.
In taking this stake, at the time of a positive final investment decision, investors would be expected to make a commitment to their share of the Company’s equity requirement. This would provide confidence to the Government, EDF and the company that new investors would fulfil their shareholder obligations as Sizewell C moves into the full construction phase.
Any prospective investor interested in participating in the equity raise process will need to complete a pre-qualification questionnaire. My officials, together with SZC GenCo’s management, will assess investors’ suitability against pre-determined criteria and confirm investors’ eligibility for inclusion in the equity raise process. Details of how to access the questionnaire will be available and signposted on www.gov.uk.
I wish to assure the House that the interests of consumers and taxpayers are central as we progress the project. The Government will only accept private investment if it is likely to result in value for money. We will continue to assess and consider our approach over the coming months and will take the time needed to reach a deal which satisfies this objective. As committed to during the passage of the Nuclear Energy (Financing) Act 2022, the Government will publish a full value for money assessment of the company and the project at the point of any final investment decision.
I also want to be clear that the equity sought at this stage does not represent the limit of potential private investment in the company, and that following the outcome of this process there may be further opportunities for private investment during construction and operations.
Finally, as well as value for money, I want to assure the House—as well as British consumers and taxpayers—that should any investments reach the relevant statutory thresholds, investors will be required to pass through the process set out in the National Security and Investments Act 2021, allowing scrutiny of any risks posed with respect to this legislation. The Government will also hold a special share in the company, enabling us to require investors to take certain actions in respect of their shareholdings should future risks appear, including on national security or public policy grounds.
I will continue to update the House on Sizewell C more broadly over the coming months.