The British government on Tuesday threw its weight behind nuclear power, saying it would back a major new generating plant on the coast of the North Sea northeast of London.
The government said it would invest £700 million ($842 million) for a 50 percent stake in Sizewell C. EDF, the French state utility, which will construct the plant, will hold the rest.
The deal squeezes out a Chinese state-owned company, China General Nuclear, which had owned 20 percent of the project. CGN received an undisclosed sum for its share, reflecting its value and representing a commercial return on development work to date, the British government said.
The deal amounts to another blow to Britain’s once warm business relationship with China. Britain actively courted Chinese investment earlier in this century. Relations, though, soured over Beijing’s crackdown on Hong Kong and other developments.
The British government is now wary of Chinese involvement in sensitive areas like nuclear power and telecommunications, worrying that the presence of Chinese companies could lead to security risks.
On Monday, Prime Minister Rishi Sunak underscored this shift, saying the “golden era” in relations with China was over. Britain has for some time been maneuvering to end Chinese involvement at Sizewell C.
The British government and EDF, which has reduced its share to 50 percent, also want to attract investors to the project, which is expected to cost £20 billion or more. A stake held by a company controlled by the Chinese government might have complicated that task.
CGN continues to be an investor in the only major British nuclear power station under construction at Hinkley Point in southwest England. It also has an understanding that it will at some point construct a Chinese-designed plant at Bradwell, which, given the shift away from Beijing, now seems highly unlikely.
Britain is clearly going in a different direction than it was earlier in this century, but one that could also prove complex. Jeremy Hunt, Britain’s chancellor of the Exchequer, said in a statement said the government’s decision “represents the biggest step on our journey to energy independence.”
The government portrayed Sizewell C as the first of a “pipeline” of new nuclear plants that will “enable the delivery of clean, safe electricity over the decades to come.” The plant would provide enough power for about six million homes, the government said.
Analysts, though, said Tuesday’s move may be only a step on what could be a long and fraught journey. It may help that nuclear power, long shunned by environmentalists and investors because of the toxic waste plants produce and risks of catastrophic accidents, is enjoying something of a revival in Britain and Europe. Despite their problems, nuclear plants are a route to generating large amounts of emissions-free electric power. “There is a much higher investor interest than just a year ago,” said Franck Gbaguidi, a senior analyst at Eurasia Group, a political risk firm. “But the overall appetite remains limited.”
The recent experience of building nuclear plants in western Europe has been plagued by long delays and cost overruns. Hinkley Point, a plant of similar design to Sizewell C being constructed by EDF, is years behind schedule.
EDF said it would leverage that experience and the trained work force at Hinkley Point to reduce costs at Sizewell C. Mr. Gbaguidi, however, said that EDF may struggle because it is “currently overwhelmed with existing and planned projects in France.”
The British government is facing increasing concerns about having sufficient electric power in the future. Britain’s nuclear plants, which produced about 16 percent of its electric power over the last year, are gradually being shut down because of age. Sizewell C, however, is unlikely to come online for at least a decade once construction starts.