The Government clean energy superpower mission is about replacing the UK’s dependence on fossil fuel markets with clean homegrown power that we control, to bring down bills for good and protect household finances.
As we drive for a clean power system, new nuclear can provide a backbone of reliable low-carbon electricity, working alongside expanded renewables to achieve a lower-cost, low-carbon and more secure electricity system for the long term.
That is why at the spending review, the Government announced plans to usher in a new golden age of nuclear power, with new funding for full-scale nuclear, small modular reactors, and fusion.
Central to this vision is Sizewell C. The spending review provided a £14.2 billion funding allocation to support project construction to the end of the spending period, building on the investments made since 2022, which have made the Government the majority shareholder in Sizewell C during the project’s development.
I am pleased to confirm today that—following the conclusion of the capital raise process and required Government approval—the Government have confirmed its final investment decision, the first for a new nuclear power station in the UK since Hinkley Point C’s construction was approved in 2016.
The Government have reached a commercial deal with a group of experienced equity investors: EDF, La Caisse, Centrica and Amber Infrastructure Ltd. The Government will take an initial 44.9% equity stake in the project and will be the biggest single equity shareholder. La Caisse will take a 20% stake, Centrica 15%, EDF 12.5%, and Amber Infrastructure Ltd initially 7.6%.
Alongside this investment, the National Wealth Fund—the Government principal investor and policy bank—is making its first investment in nuclear energy. It will provide the majority of the project’s debt finance. The remainder is set to be provided by a number of commercial banks lending to Sizewell C, under a proposed £5 billion guarantee from the French export credit agency Bpifrance Assurance Export.
Sizewell C Ltd plan to achieve a final capital cost for the project construction of around £38 billion (2024 prices). This cost estimate has been rigorously assessed by incoming investors as part of the financing process, and follows negotiations with the project’s supply chain as well as detailed scrutiny by the company of Hinkley Point C, the design of which Sizewell C will replicate. Delivering Sizewell C at this cost estimate would represent a saving of c. 20% on the estimated cost of Hinkley Point C.
During construction, consumer payments through our new funding model, the nuclear regulated asset base, will be limited to an average of around £1 a month on a typical household bill. This is a good deal for consumers, as demonstrated by the value for money assessment that will be published today. Once operational Sizewell C could create savings of £2 billion a year across the future low-carbon electricity system with consumers then benefiting from cheaper, clean power for decades to come.
Sizewell C will deliver this cheaper clean electricity to power the equivalent of around 6 million of today’s homes for at least 60 years. Sizewell C will also deliver major economic benefits, supporting 10,000 jobs at peak construction—and thousands more in the wider supply chain—and as it is built will create 1,500 apprenticeships. Seventy per cent. of the value of construction is set to be awarded to British businesses. Sizewell C Ltd anticipates it will have 3,500 UK companies in its supply chain, from across the entire country.
As well as its nationwide benefits, Sizewell C stands to make a lasting positive contribution to the local and regional economy, with £4.4 billion invested in the east of England during construction, 2,600 local construction jobs created in Suffolk at peak construction, and over one third of the apprentices to come from the local area.
Further details of the terms of the deal, including the project’s economic licence with modifications to use the RAB model, details of the project’s funded decommissioning programme, and a value for money assessment, will be published as a suite of documents on gov.uk.
To highlight key aspects of the project and the deal for the attention of the House, the commercial structure outlined above consolidates the Government position as the main provider of finance to Sizewell C, alongside the investment of our private partners.
Working in partnership with other shareholders, the Government will oversee the project’s progress and work closely with all those involved to ensure successful delivery. The private equity and debt lenders also provide a wealth of experience in delivering other large-scale infrastructure projects and encouraging positive commercial behaviours on the part of the company.
As noted, the project’s capital structure will be backed by the RAB funding model; this is a tried and tested approach to funding large-scale infrastructure, and the first time this approach will be used for a UK nuclear project.
The framework includes robust incentives and penalties for shareholders to ensure the project stays on track and mitigates the risk of significant overruns. These incentives include reducing investor returns if the project overruns cost thresholds set out in the economic licence. Lenders will also have levers to incentivise good governance and cost control by the shareholders, such as the ability to “lock up” shareholder dividends in certain scenarios. The company’s supply chain is also strongly incentivised to deliver to this cost estimate.
The RAB structure will be regulated by the UK’s independent energy regulator, Ofgem. Revenues will be collected from electricity suppliers by the Low Carbon Contracts Company, previously designated as the counterparty for revenue collection contracts for the purposes of the nuclear RAB model.
The outcome of the capital raise follows a competitive process involving a wide range of potential investors, and we are grateful to all parties who participated. The high level of interest demonstrates confidence in both the Government vision for nuclear power and in UK nuclear projects as an investable asset class, as well as confidence in the Government as a credible partner for delivering key infrastructure.
The deal confirmed today ends an era of delay to give Sizewell C the go-ahead. It will help secure Britain’s homegrown nuclear supply far beyond 2030, and marks a major step in the Government mission to take back control of the country’s energy supply, reduce dependence on global fossil fuel markets and protect household finances.
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