Millions paid to buy China out of Sizewell C, as nuclear plant gets £700m green light

The taxpayer is to hand over millions of pounds to China to buy out its stake in the project to build a new nuclear plant at Sizewell C in Suffolk.

Business secretary Grant Shapps today gave the green light to the £20bn project by confirming a £700 million government investment - the first state backing for nuclear energy in the UK for 30 years.

The state-owned China General Nuclear (CGN) held a 20 per cent stake in the project, which is intended to provide low-carbon power to 6 million homes over more than 50 years.

Downing Street refused to confirm the size of the payment to CGN, but a government source said that it allowed for the agency’s “exit from the project, including buy-out costs, any tax due and commercial arrangements”.

The move follows Rishi Sunak’s declaration on Monday that the “golden era” of closer ties with the Far Eastern giant is over.

CGN involvement in Sizewell, alongside French company EDF, was negotiated under David Cameron and George Osborne’s drive to attract Chinese investment to the UK.

But the government has since sought to exclude the Far Eastern giant from sensitive infrastructure projects - also including the 5G telecommunications network - over national security concerns.

Ministers said the investment in Sizewell, set to create as many as 10,000 highly skilled jobs, was part of efforts to secure UK energy security.

The government also said it would set up an arms-length body, Great British Nuclear, which would develop a pipeline of nuclear projects beyond Sizewell C.

The plant in Suffolk will be the second of a new generation of nuclear power reactors, after the delayed Hinkley Point C scheme in Somerset which is under construction, but has seen costs climb since it was first given the go-ahead.

EDF’s chief executive, Simone Rossi, said replicating Hinkley Point C’s design at Sizewell would provide more certainty over schedule and costs, adding: “It will deliver another big boost to jobs and skills in the nuclear industry and provide huge new opportunities for communities in Suffolk”.

The announcement comes after ministers also set out plans to reduce energy demand by 15% by 2030, with a new £1 billion Eco+ energy efficiency scheme, and a public awareness campaign, previously blocked under Liz Truss’s administration as being too “nanny state”, to help save energy this winter.

It also comes as Prime Minister Rishi Sunak is facing pressure, including from some Tory MPs, to U-turn on plans to keep the ban on onshore wind farms in England, one of the cheapest forms of energy.

Mr Shapps said: “Global gas prices are at record highs, caused by Putin’s illegal march on Ukraine.

“We need more clean, affordable power generated within our borders – British energy for British homes.

“Today’s historic deal giving Government backing to Sizewell C’s development is crucial to this, moving us towards greater energy independence and away from the risks that a reliance on volatile global energy markets for our supply comes with.”

The Chancellor Jeremy Hunt, who announced the intention to push ahead with the project in the autumn statement, said: “Today’s investment in Sizewell C represents the biggest step on our journey to energy independence – the first state backing for a nuclear project in over 30 years.

“Once complete, this mega project will power millions of homes with clean, affordable, home-grown energy for decades to come.

“Together with our drive to improve the nation’s energy efficiency, this package will help to permanently bring down energy bills and stop Britain being at the mercy of global gas prices beyond our control.”