The total cost of building the Sizewell C nuclear power station in Suffolk could reach up to £100bn once financing and shareholder payments are included, according to internal financial modelling reviewed by the Financial Times. This figure significantly exceeds the UK government’s official construction estimate of £38bn (in real 2024 prices).
Key Points:
- Base Construction Estimate: £38bn in real 2024 terms, announced by the UK government.
- Total Nominal Costs (including interest and returns): £80bn–£100bn over the construction period, according to financial modelling.
- Real Cost Equivalent: Roughly £65bn–£80bn, dependent on inflation and spending pace.
- Consumer Contribution: Estimated at £35bn–£50bn in nominal terms, funded through a surcharge on electricity bills before the plant begins operation. Households are expected to pay about £1/month on average.
Despite the government’s refusal to publish financing figures due to their variability, the Financial Times obtained details as part of ongoing fundraising efforts. These projections highlight the long-term fiscal impact of the project, especially given that public funds make up the majority of the financing.
Financing Breakdown:
- Government Funding:
- £36.55bn in debt via the National Wealth Fund (gilts).
- £3.8bn in equity.
- Private Sector Investment:
- Centrica: £1.3bn for a 15% stake, expecting 12%+ returns.
- Additional equity: La Caisse and International Public Partnerships.
- French export credit agency-backed banks: £5bn in debt.
- EDF (state-owned): £1.05bn.
- Nuclear Liabilities Fund: £400mn.
Government’s Position:
A spokesperson stated that the costs reported in the modelling do not fully reflect consumers’ financial exposure, emphasizing that Sizewell C will ultimately be less costly than its predecessor, Hinkley Point C. Profits generated by the government’s equity stake are expected to be recycled back to consumers.
The Department for Energy argues that Sizewell C is critical to ensuring clean, stable electricity supply over the next 60 years. The plant is expected to save the UK £2bn annually once operational, by replacing fossil fuel-based energy with low-carbon power.
Project Structure:
Sizewell C is being financed using the Regulated Asset Base (RAB) model, which reduces investor risk by allowing returns during the construction phase. This model aims to lower the overall cost of capital compared to traditional financing methods, where investors are paid only after project completion.
Concerns and Comparisons:
Scrutiny has intensified given public exposure to financial risks and delays experienced with Hinkley Point C. While Sizewell C benefits from being a “virtual replica,” offering estimated savings of 20%, questions remain about its long-term cost-effectiveness.
Conclusion:
As the UK pushes forward with nuclear energy to meet climate goals and enhance energy security, the financial burden on taxpayers and consumers continues to grow. With Sizewell C set to begin operation in the 2030s, the ultimate cost and impact of this mega-project will become clearer over the coming years.
