When NuGen chief executive Tom Samson made a presentation to stakeholders last week, many were surprised by his upbeat tone.
After all, to use Samson’s phrase, NuGen had just pressed the “pause” button on its plans for a nuclear power station at Moorside, Sellafield.
The scheme’s main backer, Toshiba, was engulfed in a financial crisis while its junior partner ENGIE had just exercised an exit clause in its contract forcing Toshiba to buy its 40% stake.
The prospects for Moorside appeared bleak, yet Samson was optimistic.
It is vital for Cumbria that Moorside goes ahead, and equally vital for the wider UK economy.
He told the meeting that NuGen had a “universe of options” and that he was “110% sure this phenomenal project, which will be transformational for Cumbria and the north of England, will go ahead”.
What Samson almost certainly knew, but his audience didn’t, was that the China’s State Nuclear Power Technology Corporation (SNPTC) is considering investing in NuGen.
According to the Sunday Times, a delegation from SNPTC and its parent company, State Power Investment Corporation, met executives from NuGen and the Nuclear Industry Association in London on Tuesday.
Aside from Kepco of South Korea, SNPTC is the only new potential investor to be publicly linked with the Moorside project.
Rob Johnston, Chief Executive of Cumbria Chamber of Commerce, welcomed the prospect of Chinese involvement, but with reservations.
He said: “It is vital for Cumbria that Moorside goes ahead, and equally vital for the wider UK economy.
“The three reactors there will generate more than 7% of the UK’s electricity, it is hard to see how that gap can be filled if Moorside doesn’t happen.
“We’ve been calling for the Government to take a direct equity stake in NuGen, alongside private investors, and we stand by that view.
“Having the Government on board as a shareholder de-risks private investment to a degree.
“That should mean a lower price for the electricity generated and, ultimately, a dividend for the taxpayer. That’s a win-win in my book.”
Another state-owned Chinese business, China General Nuclear, agreed to take a one-third stake in the Hinkley Point nuclear project in Somerset, alongside EDF of France, without the UK government having to take a stake.
The three reactors there will generate more than 7% of the UK’s electricity, it is hard to see how that gap can be filled if Moorside doesn’t happen.
But there have been criticisms that the strike price agreed for the electricity generated, £92.50 per MWh, is too high and will add to costs for businesses.
Rob added: “It beggars belief that, as the world’s fifth largest economy, we cannot afford to fund our own energy infrastructure. Given that interest rates are so low, this is an opportune time for the Government to invest.”
The Government’s blessing will be key to the success of any SNPTC deal, whether the Chinese invest in isolation or alongside the Koreans.
The opinion polls suggest that Theresa May will remain Prime Minister after June 8, but her attitude to further Chinese involvement in nuclear is unclear.
She hesitated over giving the go ahead for Hinkley Point and the Conservative manifesto talks about ensuring that “foreign ownership controlling important infrastructure does not undermine British security or essential services”.
Some detect there the hand of Nick Timothy, joint Downing Street Chief of Staff and Theresa May’s most trusted adviser, who claimed in 2015 that Chinese investment in nuclear power threatened Britain’s national security.
He wrote: “Security experts are worried that the Chinese could use their role to build weaknesses into computer systems, which will allow them to shut down Britain’s energy production at will.”
Despite the Prime Minister’s affirmations of support during the Copeland by-election campaign, there is no mention of nuclear power in the Conservative manifesto, which instead focuses on renewables and shale gas.
Security experts are worried that the Chinese could use their role to build weaknesses into computer systems
Another crucial component of any NuGen deal would be the choice of reactor.
NuGen had been planning to use the Toshiba-owned Westinghouse AP1000 design, which recently attained UK regulatory approval.
According to the Sunday Times, SNPTC would seek to use its own reactor — a derivative of the AP1000 model – but that could lead to more delays, perhaps as long as four years, while the design went through the approval process.
One of the cheerleaders of Chinese investment is the economist Gerard Lyons who advised Boris Johnson when the latter was mayor of London.
He spoke at the Words by the Water festival in Keswick 2014, when he told his audience: “If ‘made in China’ were the three most important words of the last decade, the three for the next decade will be ‘bought by China’.”
He sees Chinese investment in the UK’s nuclear power sector as a sign of how far China’s economy has been transformed.
And he argues that Chinese firms have an advantage when it comes to financing big infrastructure projects, because Chinese financial services firms tend to work with them when providing funding to overseas projects.
He said: “Chinese banks can be a good provider of capital, and they are a growing investor group overseas. This reflects the increasing scale of the Chinese economy and Chinese banks becoming more global in their outlook.”© Cumbria Chamber of Commerce