Four UK investors have progressed to the second stage of the fundraising process for the £20bn (€23.4bn) Sizewell C nuclear power project on the Suffolk coast, according to people familiar with the process.

These are believed to be pension fund Universities Superannuation Scheme, as well as fund managers Schroders Greencoat, Equitix and Amber Infrastructure. All four declined to comment.

The UK government’s Department for Energy Security and Net Zero and French energy group EDF are understood to have chosen six bidders in the £6bn capital raise. The other bidders are believed to be ENEC, which is owned by Abu Dhabi’s sovereign wealth fund ADQ, and Centrica.

Final bids for equity stakes in the 3.2GW project are expected to be tabled by the end of June, the sources added.

The bidders have been asked to make offers according to the level of investment return they would like, among other factors.

Source: Sizewell C

Sizewell C is being built under the regulated-asset based (RAB) model which allows investors to receive returns before large infrastructure projects have been completed. It does this by placing a small levy on customers’ bills on the basis that they will benefit from much cheaper electricity once the new nuclear power station is operational.

The UK government recently made a few tweaks to Sizewell C’s RAB model to make it more attractive to investors and to protect consumers from cost overruns. These include changes to the delay-weighted cost of capital mechanism to allow a two-year grace period after which penalties would increase incrementally. This would mean that shorter delays would be penalised at lesser levels if Sizewell C is delivered late.

Julia Pyke, co-managing director of Sizewell C declined to comment on the bidding process.

She said: “What may of interest to pension funds is that there’s expected to be around a 6% yield through the construction stage of Sizewell C.

“And there’s likely to be double-digit, inflation-protected yield for much of its life, and it’s an exceptionally long-running, exceptionally well inflation-linked asset.”

Pyke can give investors reassurances around Sizewell C’s cost of construction and its completion date because it is a copy of Hinkley C – lessening the chances that the issues that had to be surmounted at the North Somerset project will be repeated at Sizewell C.

Pyke said: “This is because we have a very detailed knowledge of what we’re buying and we’re buying from the same suppliers.”

IPE Real Assets contacted the Department for Energy Security and Net Zero, ENEC, and Centrica, but no one was available to comment. EDF declined to comment.

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