The lifespan of the Sizewell B power plant has been extended to 2055: The UK government and EDF have reached a financing agreement.

The British government and energy company EDF have reached a principled agreement on extending the operating life of the Sizewell B nuclear power plant by an additional 20 years, ensuring that this energy generation pillar remains on the grid until 2055

The plant began commercial operation in 1995 with a designed operating life of 40 years (to 2035). Under the new financing deal, EDF will invest 800 million pounds (about one billion dollars) in capital upgrades and refurbishment of the facility. These works, which will be carried out in phases during planned outages over the next 15 years, include installation of new automated systems for monitoring plant operation and environmental monitoring, as well as a complete replacement of pipelines, valves and pumps.

Economic model: guaranteed price through a 'Contract for Difference'

The financial pillar of this extension is the so-called Contract for Difference (CfD), which defines a guaranteed (strike) price of 70.50 pounds per megawatt-hour (MWh) for the period from 2035 to 2055.

This mechanism operates as a market stabilizer: if the market price of electricity falls below the agreed 70.50 pounds, the state compensates the difference to the operator. On the other hand, if the market price rises above that level, the operator is obliged to return the excess revenue to the state. Officials note that this price is noticeably lower than the price contracted for the new Hinkley Point C power plant, and that it is currently below wholesale market prices which have risen due to the ongoing global energy crisis.

“Global events again demonstrate how vital it is for the United Kingdom to secure long-term, low-carbon electricity from domestic sources, which protects households and the economy from market shocks,” said Simone Rosi, chief executive of EDF UK. And UK Energy Secretary Ed Miliband briefly added that nuclear energy is “crucial for the country’s energy security.”

CfD contracts have in recent years become the standard formula for financing new electricity generation capacity.

As for the Independent Office for Nuclear Regulation (ONR), it has stated that decisions to extend the plant's life do not require their formal consent, but that the legal condition for a license is the existence of a valid and up-to-date safety case.

The regulator stressed that it will monitor the adequacy of the new safety and security plans, but highlighted one key challenge: EDF in the coming decades must invest not only in equipment but also in ensuring the necessary people and expertise (human infrastructure) so that operational reliability remains at the highest level in the altered safety landscape.

Britain currently gets about 15% of its electricity from nuclear sources (about 5.9 gigawatts of capacity), but most of the old advanced gas-cooled and graphite moderated (AGR) reactors are set to retire by the end of this decade.

Sizewell B generates about 3% of the country's total electricity and is the only pressurized-water reactor (PWR) in the current British mix. This technology has a significantly greater potential for extended operation than the AGR fleet (in the U.S. some PWR reactors have been granted operating licenses to operate for as long as 80 years). Since 1995, this plant has produced over 270 terawatt-hours of clean energy and employs about 900 people.

Keeping Sizewell B on the grid is a transitional bridge to the construction of a new generation of nuclear power plants. The first among them, Hinkley Point C, is currently under construction and is expected on the grid around 2030, while for the Sizewell C project a final investment decision is expected by the end of this decade. London's long-term plan is ambitious: to achieve 24 gigawatts of nuclear capacity by 2050, which would cover a quarter of the country's total needs.

S.A.