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The final price tag for building the planned Sizewell C nuclear power station in Suffolk is likely to reach close to £40 billion, according to people close to negotiations over the major energy scheme.
The figure is double the £20bn estimate given by developer EDF and the UK government for the project in 2020, reflecting rising construction costs as well as the implications of delays and cost overruns at sister site Hinkley Point C.
The higher estimate is likely to raise questions about the government’s strategy to revive nuclear power, at a time of strained government finances and concerns about the cost of living.
EDF says that once up and running, Sizewell C should be able to supply around 6 million homes with low-carbon electricity for 60 years.
According to officials, the Ministry of Finance is to decide whether to proceed with the project in this year’s multi-year spending review.
The UK government and French energy group EDF were the initial backers of Sizewell C, but they are trying to raise billions of pounds from new investors, a process that is taking longer than planned.
Earlier this month, the Department of Energy Security and Net Zero (Desnz) said it could not reveal the current cost estimate for the project because it was “commercially sensitive”.
But one senior government figure and two well-placed industry sources said a reasonable estimate for the cost of building Sizewell C would be around £40bn in 2025 prices.
The government has already committed £3.7bn of government funding to the project. Ministers had planned to make a final decision on the investment by the end of 2024, but were forced to delay it until spring 2025. There is now speculation in the industry that any deal could slip past the autumn.
Potential investors in Sizewell C include Centrica, Schroders Greencoat, Emirates Nuclear Energy Corporation and Amber Infrastructure Group.
According to reports published at Companies House last week, Sizewell C “continues to make good progress in negotiations with private investors”.
Alison Downes, chief executive of campaign group Stop Sizewell C, called on the government to “come clean” with the “huge real cost” of the project given that households will be paying upfront for its construction through a levy on their energy bills. “This secrecy surrounding Sizewell C is inexcusable.”
Dale Vince, a major Labor donor and founder of green energy firm Ecotricity, wrote to the government’s new Value for Money Office warning that the construction of Sizewell “will burden consumers with higher bills long before a single unit of electricity is delivered”. .
Speaking to the Financial Times, he added: “Nuclear is too expensive, too slow – and very expensive to maintain at the end of its life.”
Nuclear power currently supplies around 14 per cent of the UK’s electricity and many experts say it will be crucial to aim to reduce carbon dioxide emissions to net zero by 2050.
However, all but one of the UK’s current aging fleet of plants is due to close by March 2030, potentially earlier if planned life extensions do not take place.
Only one new nuclear power station, Hinkley Point C in Somerset, is currently being built in the UK, but this is running late and over budget.
The project is due to start generating in 2029 at the earliest, and will cost up to £46 billion. This compares with initial expectations in 2016 that it would start in late 2025 and cost £18 billion.
Sizewell C uses the same European pressurized water technology as Hinkley Point C. EDF said Sizewell C should be much cheaper partly because lessons will be learned and supply chains will be more developed.
It is also being built using a different financial structure, the regulated asset base model, used in the water sector, including financing the new Thames Tideway sewer tunnel. Developers begin getting paid during construction from consumer accounts, rather than having to wait for the facility to be completed.
But there is skepticism within government about how much lower the price of Sizewell C would be compared to Hinkley Point C.
Progress on the project has been partially interrupted by the recent resignation of Rob Holden for health reasons as Chairman of Sizewell C Limited.
A Desnz spokesman said he did not recognize the “speculative” figure of £40bn for Sizewell C’s costs.
“The project is expected to reduce power system costs, increase our supply of secure domestic electricity and generate major investment across the country.”
