UK watchdog warns £38bn Sizewell C nuclear plant costs are ‘risky’

The cost of the UK government’s £38bn nuclear plant in Suffolk is subject to “significant uncertainty” and may not deliver net benefits to households until at least 2064, the government’s spending watchdog has warned.

The National Audit Office (NAO) said in a report that while the potential benefits of the Sizewell C nuclear plant are considerable, they remain uncertain, while the risks are “immediate, substantial and borne by the public”.

The government says the reactor, expected to generate enough low-carbon electricity to power 6 million homes when it begins operations in the late 2030s, could save £2bn a year from the electricity system compared with using other low-carbon technologies.

But for households, the overall savings could be outweighed by the cost of supporting construction until almost halfway through its 60-year operational life, the NAO said. The project could take even longer to reach “break even” if there are cost overruns or delays.

“Sizewell C is a project of exceptional scale, complexity and significance for taxpayers,” said Sir Geoffrey Clifton-Brown, chair of the public accounts committee, which oversees the NAO. “Experience from comparable nuclear projects in the UK and overseas highlights their vulnerability to delays and cost overruns.”

Sizewell C is being developed by French state nuclear company EDF as a successor to the Hinkley Point C reactor in Somerset, the first nuclear plant built in the UK in a decade. EDF has invested £1.1bn for a 12.5% stake, alongside the UK government, which has invested £14.2bn as majority stakeholder.

British Gas parent company Centrica holds a 15% stake, while Canadian pension fund La Caisse and investment fund Amber Infrastructure own 20% and 7.6%, respectively.

Nigel Cann, chief executive of Sizewell C, said the cost to household bills was an “investment in lower long-term electricity costs” that would “deliver value to consumers and to the country for the rest of this century”.

The project is already adding value by creating thousands of jobs and boosting businesses nationally, Cann added. Sizewell C said it has fulfilled a promise to source 70% of construction value from UK suppliers, spending just under £5bn.

“All major infrastructure projects involve uncertainty, and the report highlights the steps we’re taking to reduce risk and control costs,” Cann said.

A government spokesperson said investing in large-scale nuclear was the “only way to get our country off the rollercoaster of volatile global gas markets”.

Households began paying for Sizewell C via energy bills at the start of the year to help fund construction under a regulated asset base model. That differs from the Hinkley Point deal, which will generate a guaranteed revenue stream from bills only once it begins generating in the early 2030s.

Critics of the model, including campaign group Stop Sizewell C, warn that construction delays could mean bill payers support Sizewell without receiving power longer than expected, while the government bears financial risk.

Stop Sizewell C said the risks “could easily turn Sizewell C into a financial disaster” and that the funding model means investors “are the only ones who can’t lose”.

The NAO urged the government to mitigate risk through “close monitoring, greater transparency to parliament, and by securing value for money from the significant public and private investment”.