UK Govt plans sale of Chinese-owned nuclear stake to investors

A minority stake in a new £20bn nuclear power station on England’s east coast will be sold to institutional investors or floated on the stock market under UK government plans to oust China’s CGN from the project. The government is closing in on a deal which would force state-owned CGN to give up its 20 per cent stake in the proposed Sizewell C nuclear plant in Suffolk. Under the plans, the government would hold the stake until it could be sold on to institutional investors, according to people briefed on the situation. Another option to float the stake on the stock market through an initial public offering is also being examined, said these people.

The Financial Times reported in July that British ministers were exploring ways to remove CGN from future nuclear projects in the UK, including the Sizewell plant, following a cooling in relations between London and Beijing. CGN’s involvement in Britain’s civil nuclear programme has come under intense scrutiny since the government banned Chinese telecoms equipment maker Huawei from its 5G mobile phone network last year. The change in mood at the top of the government means that ministers are now expected to block CGN’s plans to build a nuclear power station at Bradwell in Essex. Under an agreement with the government dating back to 2015, CGN would pay 20 per cent of the development costs for the Sizewell plant, with an option to participate in construction once investment decisions had been finalised.

EDF, the French energy group, which holds the remaining 80 per cent stake in Sizewell, is hoping to use a financing model called the “regulated asset base” for the construction of the 3.2 gigawatt plant. This model would mean that households start contributing towards the cost of the plant through their energy bills long before it generates any electricity. The business department confirmed that talks were under way with EDF about the CGN stake and that legislation to enable the use of the regulated asset base financing model would be put before parliament next month. “CGN is currently a shareholder in Sizewell C up until the point of the government’s final investment decision,” it said. “Negotiations are ongoing and no final decision has been taken.” EDF and CGN declined to comment.

CGN is funding a third of the Hinkley Point C nuclear power station that is under construction in Somerset. The project is led by EDF, and both Hinkley and Sizewell would use Franco-German European Pressurised Reactor technology. CGN’s Taishan nuclear power plant in southern China was the first in the world to operate using EPR technology and more than 100 of the company’s engineers have been involved with Hinkley. Recommended FT Magazine The UK faces an energy crisis. Could nuclear play a vital role?

Britain’s civil nuclear programme, which has been dogged by years of delays, is in the spotlight following a recent spike in wholesale gas prices that have raised questions over the country’s future energy security.

Ministers are hoping that US nuclear company Westinghouse will, together with construction group Bechtel, push ahead with plans for a nuclear power plant at Wylfa in Anglesey, on a site abandoned by previous owner Hitachi. The government has separately pledged £215m to develop a fleet of small modular nuclear reactors in Britain. A consortium led by Rolls-Royce has been raising funding with a view to entering its design for regulatory assessment.

Relations between London and Beijing have become increasingly tense in recent years over issues including China’s clampdown on dissent in Hong Kong. This has led to a fresh appraisal of Chinese involvement in the UK, with increased sensitivity around investment in critical infrastructure. The US put CGN on an export blacklist in 2019, alleging that it had stolen American technology for military purposes.