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The Guardian
2 hours ago
- Business
- The Guardian
A ‘golden age' for nuclear power? Sizewell C must hit budget first
Welcome to 'a new golden age' for nuclear power, said Ed Miliband, the energy secretary, as he signed off the £38bn (if we're lucky) Sizewell C mega-plant in Suffolk. It will certainly look golden from the point of view of Centrica. The owner of British Gas is investing £1.3bn for a 15% equity stake in Sizewell on terms that look attractive for it. Centrica's explanation of the mechanics behind Sizewell's financing were more helpful than the government's because it demonstrated how far ministers have had to go to attract private investors for a project that was once advertised to cost £20bn. In short, Centrica reckons it will make an internal rate of return above 12% if Sizewell arrives at £40bn (all the numbers being in 2024 prices). But the revealing part was what happens if costs overrun and the construction bill ends up at £47.7bn. In that case, the company's rate of return will still come in above 10%. That is in nominal terms, so one has to knock off inflation, but it's still a decent number. And – critically – it is as low as it could go. After £47.7bn, taxpayers or billpayers are on the hook. Chris O'Shea, Centrica's chief executive, called the terms 'acceptable' and the stock market agreed. Centrica's shares rose 4% and analysts at Jefferies noted 'robust protections'. The Canadian group, La Caisse, with a 20% stake, and the UK's Amber Infrastructure (7.6%) are the other investors alongside the state itself (44.9%) and French developer EDF (12.5%). It is hard to believe HM Treasury imagined even a couple of years ago it would have to be quite so generous to attract private sector investors. That, unfortunately, is the reality of higher government borrowing costs. It all flows into the financing of big projects. So does the experience of overruns and delays at Hinkley Point C, the plant in Somerset that is due to come on stream in the 2030s. So does the need to lock in investors for years. The option of carving out private investors entirely at Sizewell was a nonstarter: you need somebody to be incentivised to hold management's feet to the fire in the hope of landing close to the headline £38bn. Centrica, as the 20% owner of the UK's nuclear fleet, is as good as any for that task (even if it's not clear what La Caisse and Amber offer). It's just that the private sector has said, in effect, that it would accept some of the risk of cost overruns – but not too much and not to a degree that would seriously eat into returns. Meanwhile, the state is providing most of the debt, which is the greater part of the overall funding package, to the tune of £36bn to be channelled through the misleadingly named National Wealth Fund. In essence, this is a big heave from the government to make Sizewell happen. What does it mean for consumers? Well, a £1-a-month charge on electricity bills from this autumn for a decade, for starters. That is how the 'regulated asset base' model works. But the mystery – still – is what we'll pay for Sizewell's electricity eventually. Here is the government's less-than-clear claim: the project 'could' create savings of £2bn a year versus the alternative of relying on renewable sources, mainly onshore and offshore wind. That is because Sizewell's higher capital costs are 'outweighed by the benefits of reduced network, interconnector and balancing costs'. In other words, nuclear power is easier to connect to the grid and its output is firm. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Put that way, there is still an argument for doing more nuclear. But the 'could' reflects the risk of cost overruns, which, if they become severe, will have to be recouped in bills. The 'golden age' depends on Sizewell's ability to hit its budget.
Telegraph
7 hours ago
- Business
- Telegraph
If one green energy plant costs £36bn, there's no hope for net zero
It is reliable, safe, and while it is not one hundred per cent carbon-free once you factor in the impact of mining for all the minerals, it is about as green as you can possibly get. There are plenty of strong arguments for increasing Britain's supply of nuclear energy, and the Energy Secretary Ed Miliband has made the right decision today in approving the Sizewell C power station. There is just one catch. The cost has doubled over the last five years, and will double again before its reactors are switched on. In reality, Miliband and the Green Commissars around him are allowing red tape and bureaucracy to drive the cost of the green transition to astronomical levels – and that will destroy the whole project. It will at least help make sure we have enough power to keep the lights on when the wind turbines aren't working. The Sizewell C nuclear power plant will generate enough power for about six million homes once it is finished. The Government will own a majority stake, but the British Gas-owned Centrica, France's EDF, along with some investment funds, have been strong-armed into taking stakes, while the taxpayer-financed National Wealth Fund will provide much of the finance. 'It is time to do big things and build big projects in this country again,' boasted Miliband as he announced the project. Here's the problem, however. The plant will cost £38bn, almost double the £20bn that was estimated when it was first under discussion five years ago. If anyone believes it will actually get delivered at anything close to that figure I have a 'pre-loved' windmill I would like to sell them. Given the atrocious cost overruns that plague every major infrastructure project in the UK the final cost will be well over £60bn and perhaps as high as £80bn. It is going to be an incredibly expensive piece of kit. It does not have to be this way. Nuclear power plants can be built at far lower cost. In France, a new plant costs an estimated €11-12bn euros, and even the Flamanville Plant, which suffered significant cost overruns, only came in at €13bn euros. Sure, costs vary according to their size, and type of reactor. But Britain Remade, a think tank, estimated Britain has the second highest costs in the world behind only the United States (which prefers to focus on its abundant fracking industry). In this country, nuclear costs an estimated £9.4bn per megawatt to build, compared with £4.4bn in France, and £2.2bn in South Korea. Given that upfront capital costs are the major expense with nuclear power – once it is up and running it is very cheap – that means energy bills will be two or three times higher for homes than they would be if we could build at the same price as South Korea. We all know the reason why. Britain has allowed the cost of building even a minor pedestrian bridge, never mind something as controversial as a nuclear power station, to be smothered in red tape. Planning reports run to tens of thousands of pages, legal challenges are allowed at every step of the way, and every form of wildlife is prioritised over the long-suffering British taxpayer. If Miliband was serious about hitting his net zero targets he would ruthlessly slash red tape until we got down to South Korean levels. If he could do that, we could take the cost of Sizewell C down to £10bn. And yet, the harsh truth is this. Miliband and the Green Commissars care even more about rules, regulations and state control than they do about saving the environment. If Miliband let the market work he could deliver green energy on time, at reasonable cost – but none of us should hold our breath waiting for that to happen.
RTÉ News
7 hours ago
- Business
- RTÉ News
UK gives green light to £38 bn Sizewell C nuclear plant
The UK government has today given new British nuclear power plant Sizewell C the final go-ahead after reaching a deal with investors, aiming to bolster net zero and energy security goals. The UK government, the largest shareholder in the project, said Sizewell C, in eastern England, will cost around £38 billion to construct. The project will also be funded by Canadian pension fund La Caisse, British Gas owner Centrica, Amber Infrastructure and French energy giant EDF. "It is time to do big things and build big projects in this country again," Energy Secretary Ed Miliband said in a statement. "Today we announce an investment that will provide clean, homegrown power to millions of homes for generations to come," he added. The plant, which has been in financial limbo for over a decade, is not expected to start generating electricity until the 2030s. The projected construction cost of £38 billion exceeds previous official estimates of £20 to £30 billion - and campaigners have warned that further cost overruns or delays could impact households. The final investment decision gives the government a 44.9% stake in the project. Among the new investors in Sizewell C, La Caisse holds a 20% stake, Centrica 15% and investment manager Amber Infrastructure an "initial" 7.6%. EDF announced earlier this month that it will take a 12.5% stake in the project - down from 16.2% ownership at the end of 2024. The UK has refocused on shoring up nuclear power since the start of the war in Ukraine, in the name of energy security and faced with a fleet of ageing power stations. Prime Minister Keir Starmer's government has also pledged by 2035 to reduce UK greenhouse gas emissions by 81% on 1990 levels, under plans to reach net-zero by 2050. The use of nuclear energy as an alternative to fossil fuels is highly controversial, however, with many environmental groups warning about safety risks and the disposal of nuclear waste. The plans for Sizewell C have been met with anger by some local residents worried about the impact of the new plant on the town of Leiston in Suffolk. Once operational, the project will power around six million homes and create around 10,000 jobs, according to the government. Near to Sizewell C is the Sizewell B nuclear power station which is due to close in 2035 - and Sizewell A which is in the process of being decommissioned. EDF is also building the Hinkley Point C nuclear power plant in southwestern England, although it has been plagued by delays and rising construction costs.
Int'l Business Times
8 hours ago
- Business
- Int'l Business Times
UK Gives Green Light To GBP38 Bn Sizewell C Nuclear Plant
The UK government on Tuesday gave new British nuclear power plant Sizewell C the final go-ahead after reaching a deal with investors, aiming to bolster net zero and energy security goals. The government, the largest shareholder in the project, said Sizewell C, in eastern England, will cost around GBP38 billion ($51 billion) to construct. The project will also be funded by Canadian pension fund La Caisse, British Gas owner Centrica, Amber Infrastructure and French energy giant EDF. "It is time to do big things and build big projects in this country again," Energy Secretary Ed Miliband said in a statement. "Today we announce an investment that will provide clean, homegrown power to millions of homes for generations to come," he added. The plant, which has been in financial limbo for over a decade, is not expected to start generating electricity until the 2030s. The projected construction cost of GBP38 billion exceeds previous official estimates of GBP20 to GBP30 billion -- and campaigners have warned that further cost overruns or delays could impact households. The final investment decision gives the government a 44.9 percent stake in the project. Among the new investors in Sizewell C, La Caisse holds a 20 percent stake, Centrica 15 percent and investment manager Amber Infrastructure an "initial" 7.6 percent. EDF announced earlier this month that it will take a 12.5 percent stake in the project -- down from 16.2 percent ownership the end of 2024. The UK has refocused on shoring up nuclear power since the start of the war in Ukraine, in the name of energy security and faced with a fleet of ageing power stations. Prime Minister Keir Starmer's government has also pledged by 2035 to reduce UK greenhouse gas emissions by 81 percent on 1990 levels, under plans to reach net-zero by 2050. The use of nuclear energy as an alternative to fossil fuels is highly controversial, however, with many environmental groups warning about safety risks and the disposal of nuclear waste. The plans for Sizewell C have been met with anger by some local residents worried about the impact of the new plant on the town of Leiston in Suffolk. Once operational, the project will power around six million homes and create around 10,000 jobs, according to the government. Near to Sizewell C is the Sizewell B nuclear power station which is due to close in 2035 -- and Sizewell A which is in the process of being decommissioned. EDF is also building the Hinkley Point C nuclear power plant in southwestern England, although it has been plagued by delays and rising construction costs. The government noted that the construction costs of Sizewell C would be around 20 percent cheaper than Hinkley Point C.
Yahoo
9 hours ago
- Business
- Yahoo
UK equities mixed as investors assess corporate earnings, await key data
By Sukriti Gupta (Reuters) -London's main stock indexes were mixed on Tuesday as investors parsed a spate of corporate earnings, and awaited the release of key economic data this week. The benchmark FTSE 100 was flat by 0944 GMT, after registering a record closing high on Monday. The domestically oriented midcap FTSE 250 lost 0.4%. Industrial miners rose 1.1%, tracking a rise in copper prices, buoyed by hopes for firmer Chinese demand. Glencore gained 2.2%, while Rio Tinto rose 1.1%. [MET/L] Homebuilders and household goods stocks led sectoral losses, falling 1.6%. Vistry down 2.7%. Data showed Britain borrowed more than expected in June as a jump in inflation pushed up the government's debt costs. In company news, British food catering firm Compass Group rose 6.1% to the top of the blue-chip index, after it agreed to buy European premium food services business Vermaat Groep for about 1.5 billion euros ($1.75 billion), including debt and also raised its annual profit forecast. Energy firm Centrica surged 3.9% after Britain approved the 38 billion pound ($51 billion) Sizewell C nuclear plant in eastern England. The company holds a 15% stake in the project. Greencore jumped 10.5%, to top the FTSE mid-cap index, after the convenience food manufacturer raised its annual profit expectations. Kier Group fell 5.1%, to the bottom of the mid-cap index, after the British infrastructure and construction group said that its CEO Andrew Davies would be stepping down, and named insider Stuart Togwell as his successor, effective November 1, 2025. Meanwhile, AstraZeneca on Monday said it plans to invest $50 billion in the U.S. to expand manufacturing and research capabilities as it reacts to White House trade policy. On the radar this week are UK flash Purchasing Managers' Index for July and June retail sales data. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
