Households could end up paying £50bn to support the new Hinkley Point C nuclear project near Burnham-On-Sea, according to government figures out this week, which are more than eight times the 2013 estimate.
The latest forecasts have revealed that EDF’s bid to build the first new nuclear plant in a generation could cost energy bill payers £50bn over the life of the project, well above the £6bn bill that was estimated in 2013.
Consumers are likely to pick up a far greater share of the project costs because the wholesale market price for electricity is falling steadily while nuclear power construction remains expensive.
Under an agreement between the Government and EDF Energy, ironed out in 2013, Hinkley is guaranteed to earn £92.50 for every megawatt-hour (MWh) of energy produced through a combination of wholesale market prices and a levy on consumer energy bills.
At the time Government said this would require top-up payments totaling £6bn via energy bills to meet the “strike price”, but falling market prices have widened the forecast gap every year since then.
The latest report said the cost of supporting Hinkley will continue to vary as the outlook for wholesale market prices shifts. In theory, the deal protects consumer bills if market prices surge above the £93/MWh mark but it also erases the benefit of cheaper market prices which many believe are more likely in the future.
The National Audit Office accused the Government of committing bill payers to “a high cost and risky deal in a changing energy marketplace.”
It said that pouring financial support into renewable energy would prove to be a lower cost option.
However, a Government spokesman says that the Hinkley contract is “an important strategic decision to ensure that nuclear is part of a diverse energy mix.”
The nuclear plant is expected to generate seven per cent of the UK’s electricity needs for 65 years with zero carbon emissions.
“Consumers won’t pay a penny until Hinkley is built; it will provide clean, reliable electricity powering 6 million homes and creating more than 26,000 jobs and apprenticeships in the process,” the spokesman added.
EDF Energy also defended the deal, saying it is a fair one which will keep the price of electricity stable. “The strike price agreed with the Government has not changed. HPC will be good value for consumers compared with alternative choices available in the 2020s,” it said.
