New funding plan paves way for Sizewell C nuclear plant

Funding rules paving the way for a new major nuclear power station will be announced in Parliament later on Tuesday.

The move is the latest stage in efforts to build the £20bn Sizewell C project in Suffolk.

The proposed plant is still subject to planning approval, but until now, the Treasury has been uncertain of how to pay for it.

Even if the project is approved, it still faces strong local objections.

The proposals include electricity customers paying for part of nuclear schemes' costs upfront through bills.

The suggested model, known as RAB (Regulated Asset Base), has already been used to finance some large infrastructure projects, including the £4.2bn Thames Tideway "super-sewer".

It allows investors to receive returns before the projects have been completed.

The Treasury was initially reluctant to use the RAB model.

Not only does it add money to consumer bills over the lifetime of the project, but it also leaves consumers vulnerable to cost overruns, which have plagued previous nuclear developments.

However, contractor EDF Energy has been adamant that lessons learned on previous projects - and the fact that it is building an identical plant at Hinkley Point - has largely mitigated those risks, says BBC business editor Simon Jack.

The high cost of big nuclear plants and the plummeting cost of renewables such as offshore wind make the project controversial.

However, the enormous amount of low-carbon non-intermittent electricity that it produces is considered by the government to be an essential part of the UK's future energy mix as existing nuclear plants are phased out.

The recent intermittency of wind power has also made the case in ministers' minds for an "always on" part of the energy supply, our editor adds.

Together, Hinkley and Sizewell C are expected to produce 14% of the UK's current electricity needs, but they are unlikely to be operational until the late 2030s.

The new funding plan has been greeted with dismay by campaigners against the proposed plant.

Alison Downes of Stop Sizewell C described it as "a desperate measure to attract investment" for "a project so toxic that no one wants to pay for it".

She added: "Compared to other energy solutions, Sizewell C is an expensive distraction - too damaging, too slow for our climate emergency and with serious question marks over its reactor technology."