(Montreal) The Quebec Deposit and Placement Fund made its first direct investment in a nuclear power plant. It puts the equivalent of $ 3.2 billion in the nuclear power plant project sizewell C in the United Kingdom.
The fund’s investment strategy gives a large place to renewable energies, but the institution had never made a direct investment in a nuclear power plant, notes its first vice-president and head of infrastructure, Emmanuel Jaclot, in an interview.
“Many studies show that we will need nuclear, if we want to reach carbonutrality in 2050 worldwide,” explains Mr. Jaclot.
The United Kingdom would be a place of choice to take this first step, according to him. “We focused on the United Kingdom, because there was a framework that was protective enough for investors, such as the cash register. »»
The investment of 1.7 billion pounds sterling represents a participation of 20 % in the project with a capacity of 3.2 GW which will provide electricity for a period of 60 years to the late 2030s.
The Caisse is the second important investor after the British government, the main shareholder at 44.9 %. Among the shareholders, there is also the French company EDF, the British multinational Centrica and Amber Infrastructure.
The announcement was welcomed with surprise since the Canadian company Brookfield was expected as the main partner of the British government.
The Sizewell C plant would reduce the dependence of the United Kingdom to hydrocarbons and reduce carbon emissions by 9 million tonnes, annually.
Environmentalists are divided on nuclear energy. It offers a hydrocarbon spare solution to reduce CO emissions2but it produces radioactive waste to be managed over many years.
The United Kingdom cannot rely on hydroelectricity as in Quebec, explains Mr. Jaclot. Solar and wind can complement the energy bouquet, but their production varies according to weather conditions. Nuclear provides more constant basic production.
Protection against cost overruns
In London, the project was however criticized for its cost overruns. The bill is now estimated at 38 billion pounds sterling ($ 70.18 billion Canadian dollars), while the previous estimate was 20 billion pounds Sterling (36.94 billion Canadian dollars).
“It is an extremely expensive project,” denounced the director of the Stop sizewell C organization, Alison Downes, in a telephone interview. It is a risky project and the history of similar projects has simply been catastrophic for costs and deadlines. »»
Mr. Jaclot says he is well aware that nuclear power plant projects have a history of excess cost. “This is obviously something we had [en tête] When we thought about that. »»
The risk sharing model reduces the exposure of the body in the event of a glitch, explains the infrastructure chief.
The institution will receive remuneration “from day 1” during the construction phase. This remuneration could be higher, if the project is delivered earlier, or lower in case of delay.
The fund has a mechanism with the British government which protects its return in the event of additional cost or significant delay, assures Mr. Jaclot.
Sizewell C would also be built from the plans of an existing power plant, which would reduce risks in the design. “There is a lot of learning that will be integrated into the project,” adds Jaclot.
The cash register did not give a range on the potential yield, but Centrica, another shareholder, spoke of an “almost” yield 11 %. The company has mentioned that the return would remain “acceptable”, even with cost exceeding, according to words reported by the British daily The Guardian.
The guarantees given to investors, however, irritate Mme Downes. She believes that the fund is taking on a reputational risk by embarking on the project. “The cash register is surely happy to have a guaranteed return during construction, but it would be at the expense of British households. »»
The household electricity bill would increase by 1 pound sterling (1.85 Canadian dollars) per month to finance the construction of the project, according to government estimates. “The nuclear power plant will produce less expensive and cleaner energy for the decades to come,” read a government statement.
A majority of British is in favor of the construction of a new nuclear power plant, 55 %, according to a Yougov poll published in June. They are 23 % to oppose it while 22 % are undecided.
Mr. Jaclot said he was aware that nuclear energy production came “with a certain number of potential risks and reputation issues”. “We really tried to set up each of the challenges that there can be around the nuclear program. We have succeeded through negotiations with the government to eliminate most of these risks. »»