Minister for Energy (): My Honourable Friend
of Balham, Minister of State
for Science, Research and Innovation has today made the following
statement:
The Government's mission to become a clean energy superpower is
about delivering secure, affordable and lowcarbon electricity for
households and businesses, reducing our dependence on volatile
fossil fuel markets and protecting billpayers for the long term.
As we move towards a clean power system, electricity demand is
expected to increase significantly as heat, transport and
industry are electrified. Delivering this transition at the
lowest cost requires a mix of technologies. While renewable
energy will form the backbone of the system, baseload power such
as nuclear is essential to maintain system reliability, reduce
overall system costs and protect consumers from exposure to
global energy price shocks.
Nuclear power therefore plays a vital role in delivering a
secure, lowcost and lowcarbon electricity system. As a source of
reliable electricity produced wholly within the UK, it provides
baseload generation to complement renewable output and helps
reduce reliance on imports.
Extending the lifetime of existing nuclear power stations is the
most costeffective way of delivering further nuclear generation.
It allows the UK to make best use of existing assets, delivering
significant volumes of clean power at lower cost than alternative
forms of new generation.
This approach is consistent with international best practice.
Several countries, including Belgium, France and the US, have
recently taken steps to extend the lifetimes of their existing
nuclear power stations to strengthen energy security and support
decarbonisation.
Located in Suffolk, Sizewell B is a critical part of the UK's
nuclear fleet. Since coming online in 1995, it has provided over
270TWh of low-carbon electricity, helping to maintain security of
supply and reduce emissions. Without intervention, the plant is
currently expected to cease operations in 2035, despite it being
technically feasible for it to continue generating for an
additional 20 years.
There are strong reasons to support the continued operation of
the plant.
Firstly, on security of supply, Sizewell B provides electricity
that is not dependent on weather conditions. This is critical to
maintaining a resilient electricity system, particularly during
periods of low renewable output, and helps reduce reliance on
imported energy.
Secondly, analysis shows that extending Sizewell B and making
continued use of the existing infrastructure will significantly
reduce overall system costs, relative to a low-carbon
counterfactual without the project. By locking in a stable price,
the Contract for Difference will also help protect consumers from
future volatility in wholesale electricity prices. During periods
of high prices, payments flow back to billpayers, delivering
direct consumer benefit. Had Sizewell B been operating under this
agreement during the energy price crisis following Russia's
invasion of Ukraine, consumers would have saved around £2
billion.
Thirdly, the project will support 900 highly skilled on-site
roles, helping to sustain both the UK nuclear supply chain and
the expertise required to deliver future nuclear projects. This
is in addition to the economic benefits associated with the new
investment required for the life extension works.
To unlock the private investment required for this extension, the
Government has reached agreement on a commercial Heads of Terms
with EDF Energy Nuclear Generation Limited (ENGL) for a bespoke
Contract for Difference to support the lifetime extension of
Sizewell B.
The Contract for Difference, once signed, will enable the
continued operation of Sizewell B beyond 2035, securing
sufficient lowcarbon power for the equivalent of 2.5 million
homes for a further 20 years, supporting our Clean Power mission
and wider energy security objectives.
The key terms are as follows:
- A strike price of £70.50/MWh (2025 prices), reflecting robust
due diligence and benchmarking against comparable projects.
- A 20year contract term, aligned with the planned extension
period.
- A twoway Contract for Difference structure, ensuring that
when electricity prices are high, payments flow back to
consumers.
- Consumer protection measures, including a one-way cost gain
share mechanism, which would ensure consumers benefit from cost
savings during the refurbishment phase. All cost overrun risk
sits with the developer.
- Incentives to support timely delivery of the lifetime
extension works, avoid extended plant downtime and efficiently
manage operation costs.
- Existing arrangements for decommissioning and waste
management remain in place.
Taken together, these terms represent a balanced deal that
supports investment while protecting billpayers.
Implementation of the Heads of Terms is subject to reaching
agreement on the longform Contract for Difference, as well as
required regulatory approvals and legislative amendments to
enable existing nuclear plants to become eligible for Contracts
for Difference. The Government intends to progress these steps in
parallel to support the timely delivery of the project. Further
details of the agreement will be published in due course.
