Hinkley Nuclear Deal ‘Cost Public £15Billion More Than It Should Have’

  • Date: 23/06/17
  • Ben Webster, The Times

The government’s deal for a new nuclear power station at Hinkley Point has “locked consumers into a risky and expensive project with uncertain strategic and economic benefits”, according to a damning report by the National Audit Office.

Households will be forced to pay for Hinkley’s power via energy bills for 35 years and the total costs have risen from £6 billion to £30 billion

Households will be forced to pay for Hinkley’s power via energy bills for 35 years and the total costs have risen from £6 billion to £30 billionEDF ENERGY/PA

Ministers failed to consider alternative ways of financing the plant, which could have halved the overall cost to households, the public spending watchdog found.

Households will be forced to pay for Hinkley’s power via energy bills for 35 years and the total costs have risen from £6 billion to £30 billion, the equivalent of £15 on the average annual bill.

The plant is under construction in Somerset and is due to open in 2025, supplying 7 per cent of Britain’s electricity. However, the NAO report recommends that the government produce a “plan B” to fill the gap in power generation if the project is delayed or cancelled. It notes that projects using the same reactor design in France, Finland and China “have been beset by delays and cost overruns”.

The NAO also recommends that the government reconsider whether more nuclear plants are needed. It says that a review of the strategic case for supporting nuclear power should be carried out every five years.

It warns that Brexit could result in taxpayers being forced to pay billions of pounds in compensation to NNB Generation, which is building Hinkley Point and is owned by the French and Chinese governments. The government’s plan to withdraw from Euratom, the European atomic energy regulator, could “trigger a compensation clause” in the deal the government signed with the company last September.

The government did not sufficiently consider the costs and risks of the deal for consumers, the report says.

Ministers took a political decision to keep the project off the government’s balance sheet by requiring the company to take all the risk during the construction phase. But they had to agree in return to pay a guaranteed price for the electricity for 35 years, which is double the current market price.

The overall cost to consumers could have been halved if the government had agreed to fund half the £18 billion construction cost, the NAO calculated.

The case for building Hinkley Point weakened while the government negotiated the final deal, partly because alternative low-carbon sources of power, such as wind and solar, became cheaper, the NAO says.

Theresa May decided to press ahead with it last September despite the government’s own analysis showing that the economic case was marginal. The result is that “consumers are locked into paying for [Hinkley Point], even if other technologies have become better value, long after 2030”, the NAO says.

Full story

Recent Popular Articles


We use cookies to help give you the best experience on our website. By continuing without changing your cookie settings, we assume you agree to this. Please read our privacy policy to find out more.