The new chancellor has affirmed the government’s commitment to building a new nuclear power station at Hinkley Point near Burnham-On-Sea, despite the possible cost of the electricity it will generate rising significantly.
Chancellor Philip Hammond said on Thursday that Hinkley Point C is still worth the huge expense, describing it as “vital” to the economy.
The new power station is being built in partnership with French state energy giant Électricité de France (EDF) and Chinese state entity China General Nuclear Power Corporation.
It was initially supposed to cost £6bn, but has since blown out to £18bn at its last estimate and could reach £37bn in total.
A 35-year deal was signed with EDF in 2013, whereby the government would pay £92.50 for each megawatt hour of electricity, paving the way for the power plant’s build.
However, electricity prices on the wholesale market have fallen significantly since the price was agreed, with the government has been left to make up the difference. A recent report from the National Audit Office estimated top-up payments would rise from £6.1bn at the start of the contract, to £29.7bn by the time it expires.
EDF is due to take its financial investment decision in the autumn to consider whether the project will proceed following years of delays.
