The paradox of Britain's nuclear program: electricity from the Sizewell C nuclear power plant will be more expensive despite lower construction costs.

Electricity from the future Sizewell C nuclear power plant will be more expensive for end consumers than the energy from its sister plant Hinkley Point C, although construction itself in Suffolk is cheaper than in Somerset, according to new details from the UK's National Audit Office (NAO) report, as reported by the Financial Times. The report also revealed that the plant will not be fully operational before 2039, which is well behind earlier government promises for the middle of the next decade

The government and the investor consortium regularly stressed that Sizewell C would be 22% cheaper to build than Hinkley Point C. However, auditors have found that this does not necessarily reflect in prices: if construction costs remain within the forecast of 38 to 48 billion pounds, electricity from Sizewell C will cost between 131 and 155 pounds per megawatt-hour (in 2024 and 2025 price levels). On the other hand, the fixed contracted price for electricity from Hinkley Point is 129 pounds per megawatt-hour.

The reason for this difference lies in risk sharing. For the Hinkley Point C project, the price of electricity was fixed before the budget overruns, and all additional costs had to be absorbed by the contractor itself, the French energy giant EDF. For Sizewell C, on the other hand, consumers take on part of the burden through the regulated asset base (RAB) model, and meanwhile there has been a drastic rise in borrowing costs and interest rates on the global market.

Although the base construction cost was projected at 38 billion pounds, investors and consumers will share extraordinary costs if they exceed 41 billion, while private shareholders have committed to injecting capital up to a maximum threshold of 47.7 billion pounds.

If more adverse scenarios are triggered, the NAO report confirms that the real total costs of the project – accounting for interest and payments to shareholders – could explode to amounts between 67 and 83 billion pounds in real terms, or an incredible 78 to 102 billion pounds in nominal terms – which are truly staggering figures.

S.A.