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The government has granted the Sizewell B nuclear power plant a 20-year lifetime extension, meaning it will now continue to generate electricity until 2055.
Owner EDF and investor Centrica said it had agreed terms with the Department of Energy Security and Net Zero, in a deal that will see its owners paid considerably less for energy than under the previous arrangement.
The agreement – known as a contract for difference (CfD) – means Suffolk plant will be paid a guaranteed, inflation-linked price of £70.50 per megawatt-hour for two decades from April 2035 to March 2055.
The cost is significantly lower than the £91.20 the government agreed to pay for new offshore wind farms earlier this year, and more than £10 less per megawatt-hour than the previous contract signed with Sizewell B.
So-called contracts for difference allow a government to guarantee a price for energy from renewable sites even if the base price falls below the threshold, with taxpayers making up the difference. And in the same manner, in the event the spot price rises above the price in the deal, the producers will then pay the government the gap.
They are seen as crucial for private sector energy companies to put up the investment required to build renewable projects, which tend to be highly capital intensive.
Sizewell B a ‘vote of confidence’ in UK nuclear plans
“Generating around three per cent of the UK’s electricity, Sizewell B is critical to delivering the reliable, zero-carbon baseload power that supports Britain’s energy security, protects skilled jobs and underpins a more resilient economy,” said Chris O’Shea, chief executive of Centrica.
“The agreement gives Sizewell B a clear, regulated framework through to the 2050s,” he added.
As part of the same agreement, Centrica has promised to plough more than £800m into refurbishment works at Sizewell B that will make the reactor safe to operate for another two decades.
Sizewell B is one of only five operational nuclear power stations, and generates enough electricity to power some 2.5m homes.
Chancellor Rachel Reeves hailed the agreement as a “real vote of confidence in hundreds of skilled workers in Suffolk”.
Energy secretary Ed Miliband added: “Nuclear power is vital for our energy security, and this extension will help produce the clean power our country needs.”
The government is also backing ambitious projects to ramp up the role nuclear plays in Britain’s energy mix, including Somerset’s crisis-laden Hinkley Point C and Sizewell C, which is close to its namesake in Suffolk.
