26 July 2021
The flagship of Britain’s new nuclear power fleet is under threat as the Government prepares curbs on Chinese involvement in critical national infrastructure.
Whitehall sources admitted last night that the £23bn Hinkley Point C project underway in Somerset could be jeopardised by plans to block China General Nuclear (CGN) from future UK projects.
The Hinkley reactor, Britain’s first in a generation, is being partially bankrolled by CGN as part of a wider deal with French company EDF to replace the UK’s aging nuclear plants.
Under Government proposals which have not been officially confirmed, CGN’s involvement in subsequent planned projects, in Suffolk and Essex, would end.
Government insiders said that there are concerns this could disrupt the linked deal under which CGN is developing Hinkley, where work is already significantly advanced.
Hinkley Point C is set to supply about 7pc of the nation’s electricity from mid- 2026. However, this could be pushed back if CGN pulls out.
CGN hopes its work on Hinkley and then Sizewell C station in Suffolk will be a stepping stone to opening its own plant in Bradwell, Essex, as part of a 2015 deal championed by George Osborne, then Chancellor.
Nuclear power generated more than 17pc of the UK’s electricity in 2020 and supporters argue it will become an ever more important source of stable energy to balance out growing use of intermittent wind and solar.
However, almost all of the ageing nuclear fleet is due to shut down by the end of this decade. EDF and CGN are the only developers committed to new plants in the UK, with others put off by the huge costs, technical challenges and long development times.
The Government’s move to curb China’s role, first reported by the Financial Times, comes amid rising concern about the emerging superpower’s crackdown on protesters in Hong Kong and its treatment of Uyghur dissidents. Boris Johnson is also kicking China’s telecoms maker Huawei out of Britain’s 5G network due to security fears.
Ministers are preparing to introduce legislation to Parliament that would allow nuclear power developers to recoup costs from household bills. This could spark a significant backbench rebellion from MPs concerned about China if CGN is involved.
Industry sources also suggested that EDF would find it easier to court pension funds and other institutional investors without the political risk of a major Chinese state partner.
The White House curtailed the ability of US firms to supply CGN in August 2019, and the Trump administration warned the UK against its involvement in this country’s nuclear industry.
CGN’s work on British nuclear power dates back to 2015 when prime minister David Cameron and Chinese president Xi Jinping hailed what was meant to be the start of a “golden era” between the two nations.
The company owns about a third of Hinkley Point C and has a 20pc development phase stake in Sizewell C, with an option to participate in the construction phase. Its own reactor design for Bradwell is going through UK regulatory approval, with CGN hoping it can then export this technology more widely.
The Times reported last night that the Government is considering buying an equity stake in Sizewell C as part of its moves to replace CGN, reversing a long-standing wish to keep nuclear build off the Government balance sheet.
Former Chancellor Philip Hammond said China is a “fact of life” and warned that excluding the country would put up costs for bill payers.
Mr Hammond, seen as a key supporter of the CGN deal when he was in government, said: “It’s possible to exclude China General Nuclear, from participating in the UK as a civil nuclear market, but the government should be honest with electricity consumers about what that will mean for their bills, and taxpayers about what it will mean for the taxpayer funding.
“You can say ‘we don’t like the Chinese’, but the Chinese are the only people who have an incentive to fund their risk a project of this nature because they’re trying to produce a demonstrator, which would then allow them to sell civil nuclear reactors elsewhere in developed countries.”
Stop Sizewell C, a campaign group in Suffolk, said the move to remove CGN “throws EDF’s funding problems into even sharper relief”.
It added: “The simple fact is that Sizewell C won’t go ahead without new investors.”
The Government has been in formal negotiations with EDF over Sizewell since December. It will gain stronger powers for it to intervene in civil nuclear deals in January 2022.
A spokesperson for the Department for Business, Energy and Industrial Strategy, said: “Nuclear power has an important role to play in the UK’s low-carbon energy future, as we work towards our world-leading target to eliminate our contribution to climate change by 2050.
“All nuclear projects in the UK are conducted under robust and independent regulation to meet the UK’s rigorous legal, regulatory and national security requirements, ensuring our interests are protected.”
CGN and EDF declined to comment.