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(Bloomberg) — Electricite de France SA and Centrica Plc are poised to agree on a draft deal with the UK government to extend the life of the Sizewell B nuclear power station by two decades, according to people familiar with the matter.
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The companies are on the verge of agreeing a heads of terms agreement with the Department for Energy Security and Net Zero, and will announce the deal within weeks, two of the people said. The final deal is expected to be agreed later this year.
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It would give the plant in Suffolk a twenty-year Contract for Difference from 2035 to 2055, one of the people said, adding that under the terms being discussed, Sizewell B would be paid around £70 ($93.85) per megawatt-hour generated.
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The cost would be significantly cheaper than the £91.20 that the government agreed to pay new offshore wind farms earlier this year. It will help boost Energy Secretary Ed Miliband’s case that the government is ensuring energy security without fossil fuels as a response to the war in Iran.
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EDF didn’t immediately respond to requests for comment. Centrica, which holds a 20% stake in Sizewell B, declined to comment.
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Nuclear power is seen as key to the UK’s net zero goals. The nation is increasingly relying on wind and solar to meet demand but needs backup power when output from those sources drops significantly. Last year, a decline in nuclear generation led to higher gas use, pushing up power-sector emissions.
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While the drop in nuclear generation was driven by outages, the UK’s nuclear fleet is also set to shrink permanently. EDF, which is the majority owner and operator of the UK’s reactors, has closed several plants in recent years. Of the nine reactors across five sites currently in operation, only Sizewell B is currently forecast to remain online after March 2030.
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EDF is also constructing the Hinkley Point C nuclear plant, though the long-delayed project appears increasingly unlikely to begin power generation before the end of the decade. The French utility is also developing Sizewell C, which it has said will be faster and cheaper to build.
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—With assistance from Priscila Azevedo Rocha.
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