Labour has agreed a deal to build the UK’s second new nuclear power in the hope of bringing down power bills – but questions remain over the final cost
The Government has struck a £38billion deal to build a new nuclear power station on the Suffolk coast – nearly double its original forecast.
Energy Secretary Ed Miliband said the Sizewell C project would supply power to six million homes, support 10,000 jobs and “bring bills down for good.”
But all households will help foot the construction work through another £12 a year on bills. And questions remain about whether the power plant can be built to budget, with the £38billion estimate way above the £20billion that French energy giant EDF – one of the key investors – forecast five years ago. Insiders insist the big increase reflects higher costs in the wake of the Covid crisis and a buffer for overruns.
The deal also includes contingencies for if the costs spiral still higher. If it gets to just over £40billion then investors, as well as taxpayers, will take a joint hit. And were construction costs to rocket to almost £48billion, the government could pull the plug. On the flipside, if the project comes in under budget then the savings will be shared.
Labour is backing nuclear – and green energy- to reduce Britain’s reliance on imported gas and electricity. It was this exposure to imports that was one reason household energy bills leapt in the wake of Russia’s invasion of Ukraine.
The Government will become the biggest equity shareholder in Sizewell C, with a 44.9% stake. New investors include Canadian investment fund La Caisse with 20%, British Gas owner Centrica with 15%, and Amber Infrastructure with an initial 7.6%. It comes alongside EDF announcing earlier this month it was taking a 12.5% stake – lower than its previously stated 16.2% ownership.
The government insisted the estimated £38billion cost is about 20% cheaper than the development of the Hinkley Point C nuclear power station in Somerset, which is under construction and projected to open in 2031.
Mr Miliband said: “It is time to do big things and build big projects in this country again – and today we announce an investment that will provide clean, homegrown power to millions of homes for generations to come. This government is making the investment needed to deliver a new golden age of nuclear, so we can end delays and free us from the ravages of the global fossil fuel markets to bring bills down for good.”
Chancellor Rachel Reeves said the development would reduce the UK’s reliance on “foreign dictators” for energy. “This is a public-private consortium. We as a Government are putting in money but that means that government – taxpayers – will get a return on that investment,” she said. Ms Reeves added: “La Caisse, Centrica and Amber’s multibillion-pound investment is a powerful endorsement of the UK as the best place to do business and as a global hub for nuclear energy. Delivering next generation, publicly owned clean power is vital to our energy security and growth, which is why we backed Sizewell C.”
Nuclear plants are seen as increasingly important electricity sources as the Government tries to decarbonise Britain’s grid by 2030, replacing fossil fuels with green power. However, the last time Britain completed one was in 1987, which was the Sizewell B plant.
Chris O’Shea, Centrica’s chief executive, said Sizewell C was a “compelling investment for our shareholders and the country as a whole”. “This isn’t just an investment in a new power station – it’s an investment in Britain’s energy independence, our net zero journey, and thousands of high-quality jobs across the country,” he added.
But the Stop Sizewell C campaign said: “This much-delayed Final Investment Decision has only crawled over the line thanks to guarantees that the public purse, not private investors, will carry the can for the inevitable cost overruns. Even so, UK households will soon be hit with a new Sizewell C construction tax on their energy bills.
“It is astounding that it is only now, as contracts are being signed, that the government has confessed that Sizewell C’s cost has almost doubled to an eye watering £38billion – a figure that will only go up. Given that Ministers claimed not to recognise the cost was close to £40 billion is there any wonder there is so little trust in this project?”
Dr Douglas Parr, policy director for Greenpeace UK, said: “The UK’s unswerving loyalty to the one energy source that consistently increases in price remains undimmed by our cost of living crisis. At a time when much cheaper renewables and storage, grid improvements and a decoupling from gas would do so much more to reduce energy costs, this announcement is testament to both the lobbying skills of the nuclear industry, and a blind optimism from the government when it comes to building atomic infrastructure that actual experience seems incapable of shifting.
“The only significant difference between the slowly unfolding economic blunder of Hinkley C and the forthcoming economic disaster of Sizewell C is that Hinkley’s predictable construction problems, delays and cost overruns were borne by EDF. EDF know they can’t afford to make that mistake again, and so this time those costs will be borne by you, the British public.”