The proposed Sizewell C nuclear power station could cost UK taxpayers more than double government estimates and take an extra five years to build, according to research.
Alex Lawson www.theguardian.com
Ministers will decide in July whether to approve the development of the Suffolk power station proposed by the French developer EDF. The business department has estimated that the government-backed scheme will add an extra £1 a month to household bills to aid construction costs.
But research by the University of Greenwich Business School seen by the Guardian shows the average monthly cost could reach £2.12, or £25.40 a year. At its costliest point, the build could cost taxpayers nearly £4 a month. That represents the study’s gloomiest forecast, which predicts construction would take 17 years and cost £43.8bn.
The project had been expected to cost £20bn and take 10-12 years to build. Stephen Thomas, a professor at Greenwich Business School, said the average forecast put the cost at £35bn over 15 years, or £2.3bn a year.
The figures could further inflame the debate over the cost and time of building power stations after Boris Johnson last month set a target of building a new nuclear station every year.
EDF admitted last week that Hinkley Point C, the power station it is developing in Somerset, would cost an extra £3bn, taking it to up to £26bn. The already delayed project will take an extra year, and is expected to begin generating electricity in June 2027. EDF had originally planned for it be operational by Christmas 2017.
The French firm said consumers would not be hit by the extra costs at Hinkley Point C, which will be taken on by EDF and China’s CGN, its junior partner in the project.
However, at Sizewell C the government has already committed £100m to the project and plans to use a regulated asset base (RAB) funding model.
RAB funding gives investors a set return during the construction phase of a project, reducing their risk and making an asset more attractive to outside investors. However, it shifts the risk of delays and extra costs on to taxpayers.
The government argues that the RAB model could reduce the project cost of a nuclear power station by more than £30bn over its 60-year lifespan. The model was used in the construction of Heathrow Terminal 5 and the Thames Tideway super-sewer.
A final decision on plans for Sizewell C was recently pushed back from 25 May to 8 July. The site is located north of EDF’s existing Sizewell B plant.
Campaigners argue that the development would be costly and threatens the local environment.
The prospect of extra costs comes as consumers face soaring bills amid the energy crisis. The government has been urged to intervene with annual bills forecast to balloon to nearly £3,000 from October.
Johnson has thrown his weight behind nuclear power as a green option to boost Britain’s energy security in the wake of Russia’s invasion of Ukraine and as he targets net zero emissions by 2050.
Thomas said: “It may not seem a huge amount extra on bills but several of these projects will overlap, meaning consumers paying even more for a long time. If costs are even higher than expected, it could become a real burden.”
A spokesperson for Sizewell C said: “The RAB model is a tried and tested financing arrangement, which has already been used to raise funds for more than £160bn of UK infrastructure. Applied to Sizewell C, it will bring the cost of finance down and deliver significant savings to consumers.”
A government spokesperson said: “We firmly stand by our assessment that a large-scale project funded under our Nuclear Act would add at most a few pounds a year to typical household energy bills during the early stages of construction, and on average about £1 a month during the full construction phase of the project.”