China in talks to build UK nuclear power plants


China is poised to make a dramatic intervention in Britain’s energy future by offering to invest billions of pounds in building a series of new nuclear power stations.

Officials from China’s nuclear industry have been in high-level talks with ministers and officials at the Department of Energy and Climate Change (DECC) this week about a plan that could eventually involve up to five different reactors being built at a total cost of £35bn.

Greenpeace described the move as desperate, while others warned of security fears, but the government has been courting China as the UK atomic programme has been hit by rows over subsidies and worries that EDF - the French company with the most advanced plans to build new reactors in the UK - could be hampered by the change of government in Paris.

China has operated its own atomic plants since 1994. It is awash with cash from its hugely successful industrial expansion and sees the UK as a potential shop window for exporting its atomic technology and expertise worldwide.

Companies from China have already invested in or taken over other infrastructure assets in Britain, such as Thames Water, the port of Felixstowe and the Grangemouth oil refinery. They also own businesses ranging from Weetabix to the Gieves & Hawkes tailoring brand.

The China National Nuclear Power Corporation (CNNPC), which is keen to invest in Britain, has just unveiled plans to raise about £17bn through a domestic share offering.

A team from the Shanghai Nuclear Engineering Research and Design Institute (SNERDI), an arm of the huge China National Nuclear Corporation (CNNC), met senior DECC officials over the last few days, three different sources confirmed.

The first part of the plan involves CNNC and another state-owned firm, China Guangdong Nuclear Power Corporation, bidding in two separate groups against each other for a stake in the Horizon consortium, which wants to construct new atomic plants at Wylfa in Wales and Oldbury in Gloucestershire.

But sources close to the Chinese say they are also interested in other locations at Bradwell in Essex, Heysham in Lancashire and Hartlepool in County Durham.

EDF has the right of first refusal to operate on these sites but CNNC wants to use an existing technology tie-up with US-based nuclear engineering group Westinghouse to potentially build three more reactors.

The Chinese accept they would need to bring in a UK utility firm to operate the plants and overcome any political or public resistance to their plans.

“The Chinese have the money and the experience,” said the well-placed source. “They see setting up in the UK as an opportunity to show they can operate in one of the world’s toughest regulatory environments so they can then move into other markets in Africa and the Middle East.”

DECC was unwilling to comment on whether it had met SNERDI officials this week, saying such meetings would be commercially confidential. A DECC spokesman would only say: “The UK is open for business and actively welcomes inward investment to our energy sector, but any potential nuclear operator is, and would be, subject to rigorous scrutiny through the established regulatory process.”

Keith Parker, chairman of the Nuclear Industry Association in London, said it was “highly encouraging” that China wanted to invest in the UK. “They have 14 of their own reactors in operation and 25 under construction and they use both [French multinational] Areva and Westinghouse designs that could be used here. It was clear from my discussions with them that they have international ambitions.”

In May, the energy minister Charles Hendry told the Energy and Climate Change select committee that he had no objection to Chinese firms being involved in the UK.

“In China, there are different companies who have experience of building dozens of nuclear power stations on time and on budget, and so there is no suggestion that these are companies that do not have expertise in this sector. They have extremely well-proven expertise in this sector, and in looking at how we take this forward in the United Kingdom I think we should be guided by where that expertise has already been proven.”

But Greenpeace said the bid to woo China was a last throw of the dice by the government. “This is a sign of desperation,” said Doug Parr, chief scientist at Greenpeace. “Chinese nuclear players have state backing, which could help solve the issue of financing colossally expensive new nuclear power stations in the UK. But this just means that the money from UK taxpayers will flow to the Chinese government, rather than to France.”

The potential for political conflict has been highlighted by the former Downing Street energy policy director Nick Butler. He wrote in a recent Financial Times blogpost that Chinese involvement in the UK energy business could be a concern [subscription required]: “They will be inside the system, with access to the intricate architecture of the UK’s National Grid and the processes through which electricity supply is controlled, as well as to the UK’s nuclear technology.

“Perhaps that doesn’t matter. Perhaps a Chinese wall exists between the Guangdong Holding company and the government in Beijing. Perhaps we have reached a level of globalisation in which the nationality of ownership is irrelevant.

“But even if all those things are true, it seems regrettable that in return for this investment the Chinese are not being required to halt the cyberattacks and the theft of intellectual property in which they are now the world leaders.”

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