(Bloomberg) -- Electricite de France SA said a UK decision on supporting a new nuclear power plant at Sizewell could come next month, potentially providing vital impetus to the giant project as European nations seek to become carbon neutral by the middle of the century.
Sizewell C will reach “a critical milestone in July, which is the government investment decision,” the project’s director of engineering and delivery Bertrand Michoud said at a conference in Paris.
“This is the moment in time when we expect the UK government to be directly involved in the project alongside EDF, and then EDF and the UK government will support the project” up to the final investment decision, Michoud said.
The UK government has outlined ambitions to triple nuclear capacity by 2050 as part of its plan to reduce carbon emissions, increase security of supplies and reduce its dependence on imports.
To help fund the 3.2 gigawatt Sizewell C plant, which has an estimated price-tag of £20 billion ($24.5 billion), the government is considering a so-called regulated asset base model, which has been used to finance large-scale infrastructure assets such as water, gas, and electricity networks in the UK.
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“We remain in active and constructive negotiations with EDF in relation to Sizewell C,” a UK government spokesperson said in a statement. “Only last week we set out further detail on the progress we are making on the new Regulated Asset Base finance model to mobilize private investment into this sector.”
While it enables investors to share some of a project’s construction and operating risks with taxpayers, the RAB model means extra costs will be added onto households’ bills at a time when prices are already at record levels. That comes as Russia is curbing gas deliveries to Europe, while EDF is struggling with reliability issues at some of its reactors.
EDF wants to get licensing and construction permitting approvals, as well as ratings from credit firms, for the Sizewell project on England’s eastern coast next month, Michoud says. Assuming the government does give its backing for the project, a final investment decision should be made next year. Construction would last until 2035, he said.
The project “needs to be investment grade if we are going to be able to raise money at a reasonable cost,” Julia Pyke, Sizewell C director of financing at EDF Energy, said Wednesday. “Assuming we get our credit rating, the government -- we hope -- is going to come along as a shareholder” at par with EDF.
“We then raise the money that we need, both the equity and debt,” with the aim to bring in other investors so that EDF and the government end up each owning about 20%, she said.
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