UK ministers tap Barclays to secure investment for new nuclear plant

UK ministers have hired Barclays to lead a search for investors willing to back a large new nuclear power plant at Sizewell on England’s east coast as part of a push to secure more domestic energy sources, according to four people familiar with the appointment.

The government is keen to forge ahead with a 3.2 gigawatt plant, capable of generating electricity for 6mn homes, at Sizewell in Suffolk as part of Prime Minister Boris Johnson’s aim to build eight nuclear reactors by 2030.

The reactor target forms part of Johnson’s energy security strategy, launched in the aftermath of Russia’s invasion of Ukraine and aimed at reducing the country’s dependence on volatile international gas markets. Ministers are also keen on smaller modular reactors of the kind being developed by a consortium led by UK engineering group Rolls-Royce.

Ministers have drawn up plans with Sizewell’s promoter, French state-backed EDF Energy, for a new company to replace the current joint venture that has been working on the Suffolk plant.

Both the government and EDF would each take a 20 per cent stake in the new company. Bankers at Barclays have been tasked with finding investors to cover the remaining 60 per cent, according to people familiar with the plans.

The revised structure would force out the Chinese state-backed nuclear company CGN from Sizewell C. CGN owns 20 per cent of the current joint venture, with EDF holding the remaining 80 per cent. But UK ministers want to avoid further Chinese involvement in British nuclear facilities, given a deterioration in diplomatic relations between London and Beijing in recent years.

CGN is already funding a third of the cost of the Hinkley Point C plant that is under construction in Somerset and upon which Sizewell C is based.

But nuclear industry experts say the government will have to tread carefully as CGN’s expertise will remain crucial to delivering Hinkley Point C. The company’s Taishan nuclear power plant in southern China was the first in the world to operate using a Franco-German European Pressurised Reactor technology that is being installed at Hinkley, and more than 100 Chinese engineers have been at work on the Somerset facility.

Hinkley Point C is already running years behind schedule and billions over budget. EDF said in May that the plant’s estimated construction budget had ballooned by a further £3bn to between £25bn and £26bn, compared with an estimate of £18bn when it received the go-ahead in 2016. The first reactor is not expected to start generating electricity until June 2027.

A planning decision on the £20bn Sizewell C plant, which would house two of the eight reactors targeted by Johnson, is due by the end of next week, although the project has met strong opposition from some Suffolk residents. The government is expected to confirm its share of funding for Sizewell C this year before EDF hopes to make its own investment decision in the first half of 2023.

Barclays and EDF Energy declined to comment. The Department for Business, Energy and Industrial Strategy did not respond immediately to a request for comment.

Additional reporting by Arash Massoudi