A further £6 billion cost increase at Hinkley Point C will test the government’s commitment to funding future large-scale nuclear projects, according to energy industry experts.
The figure was revealed alongside EDF’s accounts last week, with construction of the 3.2GW power plant now estimated to cost as much as £32.7 billion. That is a £6 billion increase on the revised construction price set last year and is almost double the £18 billion figure set in 2016 when EDF first started work on the project.
The latest cost hike has been attributed to rising inflation, however engineering problems and complex ground conditions have previously pushed the cost up, as well as a £500 million cost increase due to Covid-19 and pandemic-related working restrictions.
It has led several academics and analysts to question whether the government should revisit its plans to invest in future large-scale nuclear projects.
Jess Ralton, head of energy at the Energy & Climate Intelligence Unit said that it is “clear that nuclear has some role to play in the UK’s future energy system, but the question is at what cost?”
“If bill payers are put on the hook for new nuclear, as proposed under the Regulated Asset Base (RAB) funding model, this could drive energy bills up further at a time when the cost of living is high,” she added.
“Renewables can be built out much more cheaply and quickly and alongside investment into grid scale energy storage could represent a sounder economic and more reliable proposition for investors and billpayers alike.”
The government’s Energy Security Strategy, published in April 2022, envisages a significant acceleration of new nuclear in the UK, with an ambition of up to 24GW by 2050 to come from this source of power. In total, this would cover around 25% of the country’s projected electricity needs.
In the short term, the government has set out its ambition to take a stake in the proposed Sizewell C nuclear plant.
Alongside EDF, the UK government has previously committed to taking a 20% stake in the nuclear project, with the remaining 60% to be made up from private investors.
In the Autumn Statement, chancellor Jeremey Hunt revealed the government was putting up £700 million for development of the project and EDF subsequently appointed a design team made up of Egis, Jacobs UK, Setec TPI and Tractebel Engineering for the project in December 2022.
Paul Dorfman, chair of the Nuclear Consulting Group of academics, has questioned the decision to back the Sizewell C project, given the proposed nuclear plant uses the same reactor technology as that being deployed at Hinkley.
He added: “The fact is EDF EPR reactor design costs have ramped up everywhere they’ve been built with massive delays. So why in earth is UK government even thinking about yet another white elephant at Sizewell C?
“The key point is, via the fiscally dextrous new Regulated Asset Base funding mechanism, similar inevitable cost hikes at Sizewell C would be borne by the hard-pressed UK electricity consumer and taxpayer.”
He added: “Hinkley Point C is a fait accompli but perhaps now is the right time for the UK to really look again at what is the most cost-effective way of achieving energy security, because the answer cannot be large nuclear.”
Despite the concerns, backers of nuclear power maintain that investment in new nuclear projects is needed to ensure the UK’s energy mix is diverse enough to bring consumer prices down, meet demand and achieve ambitious net-zero targets.
Nuclear Industry Association chief executive Tom Greatrex said: “Sizewell C will be one of Britain’s biggest ever green infrastructure projects alongside Hinkley Point C, providing home-grown, clean electricity for six million homes for 80 years, significantly strengthening UK energy security and net zero targets.
“Britain needs more nuclear alongside other clean energy infrastructure projects to prevent more gas-driven crises sending inflation soaring, which has led to supply chain challenges across the clean energy sector.
“We know from the experience of other countries that delivering a programme of new nuclear plants at pace is the best way to contain costs and get us to where we need to be.”