Ministers today pledged to push the button for a new wave in nuclear power, but acknowledged that electricity prices will rise.
Kwasi Kwarteng is the Business Secretary and has introduced legislation to increase investment opportunities.
China is expected not to be allowed to participate in projects such as Sizewell C. This is a move that is being made by the government to reduce dependence on foreign money.
However, the new finance model will have consumers pay the up-front cost of nuclear plants and not a premium when they begin producing electricity.
That will potentially add £1 per week to an average household electricity bill.
Although the move will be welcomed by Tory MPs who have warned about the growing Chinese influence, it is a risk to Beijing’s anger.
China is likely to be out of projects such as Sizewell C because the government wants to reduce its dependence on foreign investment in nuclear.
Kwasi Kwarteng, Business Secretary, has revealed legislation to increase investment. The move could anger Xi Jinping the Chinese premier
To finance future nuclear power stations in Britain, the Nuclear Energy (Financing) Bill will make use of a model called the Regulated Asset Base (RAB).
The same template was used at Heathrow Terminal 5 and the Thames Tideway Tunnel super-sewer.
Developers used to have to finance the construction or maintenance of nuclear power plants until they started producing electricity.
However, the initial burden is what caused the collapse of many schemes including Hitachi’s Wylfa Wydd in Wales project and Toshiba’s at Moorside Cumbria.
As soon as the schemes receive formal approval, the costs could be shared among households. The government argues that the finance mechanism will save consumers £30billion on each new large-scale nuclear plant.
Whitehall also believes that removing China out of the equation will result in investment from British pension fund and other sources.
The state-backed China General Nuclear has a 20% stake at the current consortium proposing Sizewell C (Suffolk).
Mr Kwarteng stated that in light of rising gas prices, it was necessary to ensure that Britain’s electricity grid is supported by reliable and affordable nuclear energy from this country.
“The existing financing scheme led too many foreign nuclear developers to walk away from projects, setting Britain back for years.
“We urgently need to find a new way to attract British funds and private investors to invest in new large-scale, nuclear power stations in the UK.
“Our new model is a win/win for nuclear power in our country. This will allow us to encourage greater private investment. It will also lower the cost to finance new nuclear power, and the costs for consumers and businesses.
Currently, around 16% of the UK’s electricity comes from nuclear power. However, many of the plants are expected to be decommissioned.
The RAB model could also apply to new nuclear technologies, such as Small Modular Reactors that were designed and built in Britain.
The RAB investment model has been used on the Thames Tideway Tunnel Super-Sewer and Heathrow Terminal 5