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Tap pension funds to finance nuclear plant, government urged

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The UK government should utilise pension scheme demand for infrastructure to help fund a new nuclear power plant in North Wales, according to the chief executive of the Pensions Infrastructure Platform (PiP).

Mike Weston, who has led the PiP since its formation in 2014, said the government should consider a similar funding structure to that employed in 2015 when securing institutional backing for the Thames Tideway Tunnel, a project to modernise London’s sewers.

The site for the nuclear power station in Wylfa Newydd on the island of Anglesey is owned by Hitachi.

The company is reportedly in talks with the Japanese government to secure funding for its construction, but Weston argued that it could be an ideal investment for UK pension funds.

“Pension funds really want to invest in infrastructure, and there’s no shortage of capital if the projects are structured in the right way with the right risk/return characteristics,” he told IPE.

“[Wylfa Newydd] is a large project, relatively early in planning. The Thames Tideway is a pretty good model, so why not think about something similar?”

The government has granted some guarantees to Thames Tideway investors, and it began paying backers a yield as soon as construction started.

Weston added: “Thames Tideway was quite a success in accessing pension fund capital. It is an option that was proven to work. I’m not saying it would be exactly the same – it’s very different building a nuclear power station to digging a tunnel underneath London – but it’s a big construction project that will take a number of years to get built. It makes sense to look at Thames Tideway and see if those basic building blocks can be applied.”

In July last year, Dalmore Capital – which manages money on behalf of the PiP – formed part of the Bazalgette Consortium that will finance the £4.2bn (€5bn) Thames Tideway Tunnel.

In addition to Dalmore, the group included Allianz Capital Partners, Amber Infrastructure Group, DIF and Swiss Life Asset Managers.

Last week, the PiP announced its first co-investment arrangement with founding investor Railpen.

The £21bn pension fund invested alongside the platform to provide £20.3m of funds to refinance debt linked to a portfolio of nearly 2,000 rooftop solar panels.

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