The UK Department for Energy Security & Net Zero (DESNZ) has announced that the UK Government and Sizewell C Limited are launching a pre-qualification process for potential investors, “as the first stage of an equity raise process for the Sizewell C project.” This follows “agreement with our co-shareholder EDF”.
Sizewell C is expected to host two EPRs producing 3.2 GWe similar to the Hinkley Point C plant, under construction in Somerset. EDF Energy submitted a development consent order (a planning application) for the plant in May 2020, which was granted in July 2022. In March, the UK's Environment Agency granted environmental permits – a radioactive substances activity permit, a combustion activity permit and a water discharge activity permit – for the plant.
The UK government in August made available a further £341m ($434m) of previously allocated funding for development work at Sizewell C. “The extra money will help prepare the site for construction, procuring key components from the project’s supply chain, and expanding its workforce,” the statement said. The funding builds on the government’s existing £870m investment and “would be confirmed according to the project’s agreed spending plans and development schedule”. The funding was made available from the DESNZ Capital Budgets, as agreed at the 2022 Autumn Statement
EDF said in November 2022 that construction of Sizewell C remained subject to a final investment decision and said that this depended on the achievement of certain key stages, in particular the ability to raise the necessary financing to carry out the project as well as “the deconsolidation of the project from the Group's balance sheet". EDF added that it planned to "retain only a minority stake in the final investment decision – a maximum of 20%". Originally China General Nuclear (CGN) held a 20% stake in the project but in 2022 CGN pulled out of the project after the government paid £679m to become a 50% partner with EDF.
DESNZ said new nuclear projects such as Sizewell C are key to government plans for enhancing UK energy security and for reaching Net Zero, by helping to achieve a long-term electricity system which is secure and stable, low-cost and low-carbon.
“The government has assessed that seeking private investment through the RAB structure has true potential to result in a good value for money outcome for consumers and taxpayers, as the RAB structure is set up to incentivise the company (and in turn, the private investors) to drive the project’s construction to schedule and ultimately help to promote efficiency and enhance overall value. To ensure that this investment benefits the company, consumers and taxpayers, specific attributes are being sought.”
The statement continued: “Specifically, we are aiming to obtain investment from organisations able to take a meaningful stake in the company. Being able and willing to own a significant part of the company’s equity will be vital in ensuring that investors are able to have a substantial and positive influence on delivery over the construction period. It will also ensure that investors are meaningfully exposed to the incentives included in the company’s licence, motivating them to monitor and intervene in delivery.
Additionally, private sector investors must bring sufficient benefits to the company to justify their involvement.”
DESNZ said, for this reason, “investment is being sought from those with significant experience in the delivery of major infrastructure projects, especially in large-scale nuclear or other complex energy or infrastructure projects”. Drawing from this experience “would ensure Sizewell C benefits from expertise in areas such as project risk management, cost control, and instilling projects with a culture of commercial focus”.
The statement said: “In taking this stake, at the time of a positive Final Investment Decision, investors would be expected to make a commitment to their share of the company’s equity requirement. This would provide confidence to the government, EDF and the company that new investors would fulfil their shareholder obligations as Sizewell C moves into the full construction phase. The government is clear that the interests of consumers and taxpayers are central as to this process, and will only accept private investment if it is likely to result in value for money. This approach will be assessed and considered over the coming months, and the government will take the time needed to reach a deal which satisfies this objective.”
The first stage in this process will be for prospective investors to complete a pre-qualification questionnaire (PQQ), which will set out certain requirements in more detail which prospective investors will need to meet in order to pre-qualify. Verification checks may be undertaken to ensure that PQQ applicants are bona fide investors who wish to respond to the PQQ. Investors who have received the PQQ will have until 9 October to submit their responses to the pre-qualification questions. Investors who are successful in the pre-qualification phase will be invited to participate in the bidding process for the Sizewell C equity raise.
Secretary of State for Energy Security & Net Zero, Claire Coutinho, said: “Investing in Sizewell C is an exciting opportunity to be a part of the UK’s nuclear revival – delivering clean, reliable, and affordable power for generations to come. This project will create thousands of jobs, power 6m homes and will boost our energy security. We are focused on securing good value for taxpayers and look forward to seeing strong and competitive bids to be a part of this exciting project.”
Sizewell C Company Joint Managing Director, Julia Pyke, said the launch of the formal equity raise “opens another exciting phase for the project, following a positive response from investors during market testing”. Investors who participate in Sizewell C “should feel confident in our proposals as we are building a replica project with government backing, a mature reactor design and a workforce ready to build it”. She added: “We look forward to starting the main site construction and delivering this vital project which will reduce costs for consumers and help to create a future-proof low-carbon energy system for Britain.”
Minister for Nuclear & Networks, Andrew Bowie, said: “Following the first government direct public investment in a nuclear project for a generation, I look forward to seeing strong and competitive bids from potential investors to bring new expertise and experience into the company to help deliver this critical piece of national infrastructure.”
EDF Energy CEO Simone Rossi expressed support for development of the Sizewell C and the launch of the equity raise. “The very significant investment that EDF continues to make in Britain at Hinkley Point C benefits Sizewell C through replication of the design and construction, and a proven UK supply chain.”
