Wednesday, October 5, 2022

After £20B ‘British Snub’ To China, Another Nuclear Project Faces The Heat Over Chinese Involvement

Amid ongoing tensions between the UK and China, French energy giant EDF has issued a warning that a new nuclear reactor site in Essex is in jeopardy due to the political opposition over the inclusion of a Chinese investor. 

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Earlier, as EurAsian Times reported, London was planning to remove a Chinese company from a £20 billion nuclear power plant project, a move that reflects the growing unease between China and the West.

The French company is in partnership with a Chinese firm to build a nuclear power station in the UK. EDF, one of the Big Six energy suppliers, has reportedly informed investors that it is under no obligation to keep funding the Bradwell, Essex project and that there is now “major uncertainty” about its completion.

EDF also highlighted in its annual report that if China shows no interest in a 2023 financing round, it may have to finance billions more for Hinkley Point C, the UK’s first new-generation nuclear power station in three decades. 

Under a 2015 nuclear cooperation deal between China and the UK that has been hailed as a new “golden era” between the two countries, state-owned energy corporation China General Nuclear (CGN) is currently developing the Hinkley Point C in Somerset, Bradwell B, and Sizewell C in Suffolk. 

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The fresh impediment appears at a time when British Prime Minister Boris Johnson announced last month its intentions to develop 8 more nuclear power facilities to minimize the UK’s reliance on Russian energy following the invasion of Ukraine.

China General Nuclear Power Group

Johnson has also promised to build so many mini-nuclear reactors that “not everyone will have their little modular reactors in their backyard, but close by.” 

It is no secret that the country is attempting to exclude Beijing from its nuclear infrastructure, with the British Prime Minister declaring in November 2021 that China will be barred from future involvement in the development of new nuclear power plants. 

The EurAsian Times had earlier reported that the country is even seeking fresh investors to replace Chinese ones. However, EDF has now indicated that political opposition to China’s funding may cancel the Bradwell project.

So far, the facility has secured regulatory permission in the United Kingdom for a Chinese reactor design provided by the joint venture business General Nuclear Systems (GNSL). EDF and CGN each control 33.5 and 66.5 percent of the Bradwell project.

In an investor note, EDF said: “There is a great deal of uncertainty about the Bradwell project’s development prospects, mainly related to political opposition to a Chinese company leading a critical UK infrastructure project and a lack of support from local stakeholders.”

“The risks of not being able to complete the Bradwell project are high and have increased in 2021,” it added. 

“EDF’s commitment to fund GNSL and Bradwell is subject to an equity cap with no obligation to fund the project over the funding cap.” 

Vladimir_Putin_and_Xi_Jinping
File Image: Vladimir Putin and Xi Jinping

Will China Pull Out Of The Project?

In February, the Office of Nuclear Regulation approved the implementation of China’s HPR1000 technology at Bradwell. This significantly boosted China’s domestic technology, indicating that Chinese design may gain global acceptability.

“The UK HPR1000 design has been assessed against the high levels of safety and security expected in the UK, and issuing the Design Acceptance Confirmation – after rigorous and detailed assessments undertaken by a wide range of my specialist inspectors – means we consider the UK HPR1000 design is suitable for deployment in the UK,” said Office for Nuclear Regulation (ONR) Chief Nuclear Inspector Mark Foy at the time. 

The latest report said that the action provided China with an incentive to abandon its nuclear ambitions in the United Kingdom and export its reactors elsewhere.

Hinkley Point C nuclear power station - Wikipedia
Hinkley Point C nuclear power station – Wikipedia

“CGN is only in the UK for the opportunity to build its technology in Bradwell. There’s no other reason it’s here,” the report said, citing a source familiar with the matter. 

The Chinese company could depart Hinkley and sell its stake to someone else. The UK government is the only other prospective investor. But, there are no other companies in Europe that are interested and no other potential sources of funding.

“CGN would like to pull out now because what they wanted was approval from the UK safety agency for their design so they could sell it elsewhere in the world. The Chinese have not yet managed to export reactors,” the report said. 

EDF mentioned the possibility of the Chinese pulling out of Hinkley C for the first time. Steve Thomas, professor emeritus of energy policy at the University of Greenwich told the telegraph that EDF will need to spend up to approximately £7.7 billion to fund the whole cost overrun, boosting its proportion to 77.6%. 

The French energy giant is set to announce the results of a cost assessment in the coming weeks, citing delays blamed on problems such as the Ukraine conflict. EDF said in its report: “The total funding needs of the project exceed the contractual commitment of shareholders and shareholders are asked to provide additional equity voluntarily in 2023.

If the company’s partner does not contribute beyond the contractual commitment, this could drive the group to increase its share to support the project from that point forward.  

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