The funding was included in Wednesday’s Budget and follows an announcement by ministers this week of an overhaul of the financing model for new nuclear plants that will see households paying an upfront levy through their bills to help lower overall costs.
Business secretary Kwasi Kwarteng said the government will use the regulated asset base (RAB) financing model to fund future nuclear power stations in Britain – a tried and tested method that successfully financed other infrastructure projects, such as the Thames Tideway Tunnel and Heathrow Terminal 5.
Prime minister Boris Johnson has made it clear that nuclear energy must play a key part in reaching the UK’s net zero goals.
Despite commitments by successive governments over the past decade to build a new generation of nuclear power stations, most of the projects have collapsed as the private sector was unwilling to fund them.
Most of the UK’s existing fleet of 13 reactors, which supply about 15% of the country’s electricity, are being retired this decade, with the last one due to close in 2035. France’s state-backed EDF is currently building Hinkley Point C in Somerset, the only new nuclear plant in the UK. It wants to build two EPR units at Sizewell C.
Three projects – Wylfa, Moorside and Oldbury – have either been cancelled or shelved, largely because of financing problems, while Bradwell remains in the early technical stages.
Chancellor Rishi Sunak did not mention Sizewell C in his Budget speech on Wednesday. But accompanying Treasury documents said there were “active negotiations” with EDF over the plant and that it had allocated “up to £1.7bn of direct government funding” to help reach a final investment decision before the next election “subject to value for money and approvals”.
Tom Greatrex, chief executive of the London-based Nuclear Industry Association, said the news was “a big vote of confidence in nuclear and a historic step forward for nuclear investment”.
He said: “We can’t get to net zero without investing in new nuclear capacity, and this is a clear signal from government to investors that it sees nuclear as essential to our clean energy transition. This is not only an investment in a greener future, but also in jobs and skills right across the country.”