If the government wants to make a new nuclear plant at Sizewell C an attractive investment it this already becoming evident in early engagement that it “needs a pollical declaration” of support from across political lines, according to Stephen Vaughan, vice chair of Energy & Power at Rothschild and co.
Vaughan was speaking at the World Nuclear Association’s (WNA’s) Strategic eForum on Sustainable Finance,about the experience of seeking investors for Sizewell C, planned as the UK’s follow-up to Hinkley Point C (which is currently under construction).
Sizewell C’s developer EDF – which is building Hinkley Point C – will retain just a small minority stake in Sizewell C, so Vaughan’s team is trying to source £20B of other investment. He said, “we need the cheapest pool of capital available” so the plant can provide returns while generating power at the target price of £40-60/MWh.
Vaughan said that for the type of investors needed – organisations like pension funds looking for long-term, low-risk investments – there were long term reputational issues to consider. That meant that as well as meeting commercial criteria, the project had to fulfil their needs in terms of political and public support. A cross-party consensus that nuclear is essential to meet the UK’s Net Zero goals “really cannot be equivocal,” he said.
Potential funders would have an investment for decades that they would have to be able to defend, he said, and they would be worried about what their investors, employees and customers think.
He said when it comes to big, high-profile investments “investors don’t want to be controversial”. It was already becoming evident in early engagement that it “needs a pollical declaration” in order to raise money at the right price.