The UK Department for Energy Security & Net Zero (DESNZ) has published details of a new subsidy scheme – the Sizewell C Development Expenditure (Devex) Scheme – “to enable continued support to the development of the proposed new nuclear power plant Sizewell C to the point of a Final Investment Decision (FID) and thereby ultimately reach operation”. More specifically, the Devex Scheme “will provide the government with greater flexibility to cover development expenditure costs up to and including FID. The total value of support allowed by the scheme is £5.5bn ($7.2bn).
Sizewell C, in Suffolk, is expected to host two EPR reactor units producing 3.2 GWe similar to the Hinkley Point C plant, under construction in Somerset. EDF Energy submitted a development consent order (planning application) for the plant in May 2020, which was granted in July 2022. In March 2023, the Environment Agency granted environmental permits for the plant.
The UK government in August 2023 made available a further £341m ($434m) of previously allocated funding to help prepare the site for construction on top of the government’s existing £870m investment made available from the DESNZ Capital Budgets. EDF said in November 2022 that construction of Sizewell C remained subject to a FID that depended on the achievement of certain key stages, in particular the ability to raise the necessary financing. DESNZ said that, subject to receiving the relevant approvals, the government is aiming to reach FID before the end of 2024.
In January, a further £1.3bn of government funding was approved to enable necessary infrastructure work such as roads and rail lines to continue pending a FID. In March Sizewell C Ltd, a standalone company majority-owned by the UK government, signed a deal with EDF Energy to purchase the freehold of the land for the new power plant.
Support granted under the Devex Scheme will mainly comprise equity injections by the UK government but also provides for additional support through other mechanisms “where appropriate and proportionate”, such as letters of credit, indemnities and guarantees. DESNZ said the government has developed a “targeted financial intervention” intended to deliver Sizewell C. The exact scope of the measures will depend on the timing of the FID as well as market feedback received in the course of the ongoing equity raise process.
The UK government launched a pre-qualification for potential investors as the first stage of an equity raise process in September 2023. New legislation has approved a Regulated Asset Base (RAB) funding model, whereby consumers would contribute towards the cost of construction. This replaced the Contracts for Difference system under which developers would finance construction and would only begin receiving revenue after the NPP was operating.
Julia Pyke and Nigel Cann, joint managing directors at Sizewell C, welcomed the subsidy scheme: “This latest commitment enhances our ability to deliver key works over the next year, from developing local infrastructure to progressing significant earthworks onsite, new offices, and training facilities,” they said in a statement.
