Taxpayers will hand China millions of pounds to quit its nuclear power venture in Suffolk as part of a £700m deal as the “golden era” of UK-China relations comes to an end.
The Government is spending an initial £679m to help get the £20bn Sizewell C nuclear power plant project off the ground and has confirmed part of this will go to state-owned China General Nuclear (CGN) under an exit deal.
It has not disclosed what proportion will go to CGN but a Government spokesman said the payment “covers the value of their shareholding, their contribution to the project’s development and a commercial return reflecting their work to date”.
He added: “The value of their 20pc stake in the project is commercially confidential.
“CGN has decided to exit the project at this stage in its development, following constructive commercial negotiations.”
China has played a key role in the development of new nuclear power in the UK since 2015 when it was welcomed into the sector as part of a “golden era’ under former prime minister David Cameron.
It signed a deal under which it would help finance and develop three nuclear stations, two as a minority partner with France’s EDF and the third in which it would be lead developer.
The first of those, Hinkley Point C, is now being built in Somerset, but the Government has moved to curb any further involvement of CGN in the nuclear sector amid concerns about Chinese involvement in critical national infrastructure.
The second, Sizewell C, is in the early development stages and will now be taken forward by EDF which needs to bring in other investors, while CGN’s planned third station, in Bradwell, Essex, appears to be off the table.
It comes as Rishi Sunak said on Monday night that the “golden era” in relations between the UK and China “is over”.
In his first major policy speech since taking office, the Prime Minister rejected the “naive idea” that free trade would result in the emergence of democracy in China.
But he also warned against a return to Cold War-style hostilities, arguing “we cannot simply ignore China’s significance in world affairs”.
The UK needs to build new nuclear reactors to help replace its ageing fleet which currently supply about 18pc of electricity across the year but all but one of which is set to close down within the decade.
The Government’s £700m backing for Sizewell C will see the state take a 50pc stake in the development of the project.
It marks the first direct government investment in a new nuclear power project since Sizewell B in 1987. The state will now help EDF bring in outside investors.
Grant Shapps, the business secretary, said the Government’s £700m backing for Sizewell, which was first announced under Boris Johnson, was a “historic deal”.
He added: “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.”
Jeremy Hunt, the Chancellor, 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.”