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UK to approve new nuclear plant at Sizewell C ahead of White Paper: report

Highlights

EDF's second UK twin reactor EPR plant

Details of new funding model awaited

10-point plan and White Paper imminent

London — The UK government is close to approving Sizewell C, the 3.2 GW EPR nuclear power station project proposed by EDF Energy in Suffolk, England, the BBC reported late Oct. 30.

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An application to build the GBP20 billion ($25.75 billion) plant was accepted for examination by the UK's Planning Inspectorate on June 24.

An EDF spokesperson told S&P Global Platts Nov. 2: "Sizewell C will help to drive a green economic recovery by providing a big boost for jobs, skills, apprentices and nuclear supply chain businesses across the UK. The project is ready to help the UK achieve net zero and we hope for a positive commitment from the government soon."

Approval of a Development Consent Order by the government is expected in a 10-point plan to be published in the coming days ahead of the Energy White Paper in late November, the BBC said.

"EDF has previously stated that the all-in cost for Sizewell will be between GBP40-GBP60/MWh versus the GBP92.5/MWh (2012 prices) used to underpin the ongoing construction on Hinkley Point C," Royal Bank of Canada said in a note Nov. 2.

Key to the new project would be the funding model, RBC said.

"It may be that the government takes a direct stake in the project, and that the construction will be remunerated under some form of RAB [regulated asset base] model with a "regulated" return," the bank said.

RAB model

The government has been working on a RAB-based funding model for new nuclear plants, but a proposal due last summer has yet to materialize.

Under a RAB model, energy regulator Ofgem would establish an estimated allowable cost for the project and set a fixed rate of return for investors.

Payments from UK retail power consumers would be made during construction and operation to a project company, with payments increasing over the construction period in line with cumulative spending.

Sizewell C could generate power at a cost of GBP40-GBP60/MWh if construction was funded via a RAB model, Sizewell C's finance director Julia Pyke said on Oct. 21.

The final cost of power within the estimated range would be "determined by how government allocates risk in terms of the cost of money," she said.

Further details on a funding model for Sizewell C were likely to be included in the government's Energy White Paper, Pyke said.

In October, 2015, EDF and China's CGN signed a heads of terms agreement to develop two 1.65 GW EPR reactors at Sizewell C -- EDF taking 80% and CGN 20% during the development phase.

Europe's first EPRs, being built in Finland and France, are many years behind schedule and billions of euros over budget.

In May this year J-zero was achieved on reactor base two at Hinkley Point C, marking the point when construction moves from below ground to above ground. J-zero was achieved in June 2019 on the first reactor base one. A first EPR at Hinkley Point C is due online in 2025.