Briefing: China's Involvement in UK Nuclear

Last updated: 5 July 2022

What did the UK and China agree in nuclear energy?

  • In 2015, China General Nuclear (CGN) signed a Strategic Investment Agreement to participate in three nuclear projects in the UK: Hinkley Point C, Sizewell C and Bradwell B. The deal was formally announced during Chinese President Xi Jinping’s state visit to Britain.

    • A crucial part of the deal was that EDF agreed to help CGN gain a licence to build its own nuclear reactor, Hualong, in Britain. The UK’s nuclear regulatory regime is seen as one of the most stringent in the world, and this was set to pave the way for CGN to roll out its nuclear power plants globally.

  • The groundwork was laid in the first UK-China Energy Dialogue in 2010. By 2014, the UK and China had signed a civil nuclear agreement, including an agreement that would enable Chinese companies to own and operate a Chinese designed nuclear power station.

  • The UK Government had repeatedly signalled that it wanted to China to play a key role in its nuclear energy. Earlier in 2015, Amber Rudd, energy secretary, said she wanted Beijing to take the lead in developing new nuclear plants in Britain, including leading the construction of a Beijing-designed nuclear power plant in Essex, its first in the west.

What is the current status of Chinese involvement in UK nuclear?

  • CGN is a Chinese state-owned enterprise, run by an arm of China’s State Council. Its involvement in our nuclear industry is now seen as unacceptable national security risk.

  • The Government has not publicly opposed CGN’s involvement but has been reported to be taking steps to remove it from Sizewell C and Bradwell. The removal of CGN would effectively tear up the government’s 2015 deal with CGN - seen as pinnacle of the ‘Golden Era’.

  • Removing CGN has required the Government to develop alternative funding models.

    • In 2022, the Nuclear Energy (Financing) Act came into law, which enables the Government to use a Regulated Asset Base (RAB) model to fund future nuclear projects.

  • In 2022, CGN’s Hualong One reactor was approved by the the Office for Nuclear Regulation (ONR) and the Environment Agency on technical grounds. This could pave the way for its construction in other countries, but it is not expected to ever be built in the UK.


Hinkley Point C

Status: Under construction

  • Hinkley Point C will be the UK’s largest power plant for 20 years, with 3.2GW of capacity. Completion is expected in 2026, with costs running 44% higher than expected in 2015.

  • CGN has funded 33% of the project so far, with EDF holding a 67% stake. The next investment round is in 2023.

Sizewell C

Status: In negotiations

  • Sizewell C is expected to be the next nuclear power plant to be constructed in the UK, with a Final Investment Decision (FID) due by 2023. Negotiations between the UK Government and EDF have been ongoing for months.

  • Sizewell C will be the first nuclear project to use the new Regulated Asset Base (RAB) model, which came into law in 2022.

  • The Government has invested £100 million into the project, with the option to convert this into equity if the project goes ahead. It has been reported that the Government will take 20% stake in the project, worth £4 billion - effectively removing CGN.

  • The investor mix is still being negotiated. The FT reports that the Government is currently seeking private investors for the remaining 60% stake.

External link: BEIS documents on creation of NNB Generation Company (SZC) Limited and case for Sizewell C.

Bradwell B

Status: Unknown

  • In 2022, CGN’s Hualong One reactor (UK HPR1000) was approved by the the Office for Nuclear Regulation (ONR) and the Environment Agency as suitable for construction in the UK.

  • But it has been widely reported that the Government does not plan to approve CGN’s plans build its own reactor at Bradwell.


What is the UK Government’s nuclear strategy today?

  • 5 of the UK’s 6 existing nuclear power plants will be offline within the next decade, and there is only one new project (Hinkley Point C) in construction.

  • This gap in low-carbon power generation led to the two key commitments Government’s new energy strategy:

    • The creation of a new body called Great British Nuclear to boost the UK’s nuclear power generation capacity.

    • To deliver 24GW of nuclear energy capacity by 2050.

      • £100 million into Sizewell C to help develop this project, expected to reach Final Investment Decision (FID) by 2023

      • £210 million to develop Small Modular Reactors with Rolls Royce

      • £120 million Future Nuclear Enabling Fund to progress new nuclear

What are the alternatives to CGN?

  • Alternative funding models: In 2022, the Nuclear Energy (Financing) Act came into law. This created a provision for the Government to implement a Regulated Asset Base (RAB) funding model for new nuclear projects. 

    • A RAB model lowers the cost of capital by enabling investors to share some of the project’s construction and operating risks with consumers. It reduces reliance on overseas developers to bear the entire cost of construction.

    • The Government estimates that it could lower the cost of each new large-scale nuclear power projects by more than £30 billion, compared to the existing Contracts for Difference model used for Hinkley Point C.

  • New technology: The strategy focuses on modular nuclear reactors which are faster to build and fewer security risks - but technology is still nascent. It has approved a new Rolls Royce reactor, backed by Qatari investment.

  • Working with allies: BEIS has been speaking with the US: executives from the US construction giant Bechtel teaming up with Westinghouse, a US nuclear technology company owned by Canada’s Brookfield, to develop another nuclear power station, at Wylfa on Anglesey.

What are other countries’ attitudes to CGN?

  • The UK and Romania were the only European countries to agree to have CGN build its own model of a nuclear power plant in the country.

    • Romania terminated negotiations with CGN on the construction of two nuclear reactors in 2020.

    • The Czech Republic last year excluded Chinese companies from taking part in a tender to build a new nuclear reactor. 

    • CGN lost out to the US firm Bechtel in the contract for Poland’s first nuclear power station.

  • The French government in 2016 welcomed the Hinkley Point deal, and CGN most recently won a bid for a French solar plant in 2018.

  • US officials told the May government in 2017 not to partner with Chinese state-supported companies on nuclear plants due to its links to the military. CGN was blacklisted by the US government in 2019.

What is China’s attitude to nuclear power?

  • China is seeking to become a global leader in nuclear power. While nuclear power contributed 4.9% of the total Chinese electricity production in 2019, the country is on track to become the world’s largest producer of nuclear energy.

  • According to GlobalData, China has 19 reactors under construction, 43 reactors awaiting permits, and a massive 166 reactors that have been announced. This pipeline adds up to 254.6GW of capacity.

  • China is still aiming to build 30 nuclear power units in countries involved with its Belt and Road Initiative by 2030. CGN’s Hualong One reactor received UK regulatory approval in 2021, which may be used as an international standard for developing countries.