Lawmakers Cast Doubt on UK’s Sizewell Nuclear Financing Plan

Rachel Morison
·2 min read
1

(Bloomberg) -- A parliamentary committee raised doubts about the UK’s plan to finance Electricite de France SA’s Sizewell C nuclear power plant, saying protecting taxpayers should be a top priority.

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The government is trying to attract private investors through a mechanism that shares the risk of construction costs with the public. However, this so-called regulated asset base model has considerable downside, leaving consumers unfairly exposed, according to the House of Commons Science, Innovation and Technology Committee, which advises the government.

“The consumer or taxpayer is taking an unknown and uncertain risk of cost overruns, yet disburses funds from day one without earning a return,” the committee said in a report published Monday. “The choice to proceed with gigawatt-scale nuclear power should not be made without robust estimates of its value for money, including the financial value of the construction risk being assumed by taxpayers or billpayers.”

The UK has set a target of building 24 gigawatts of nuclear capacity by 2050, a huge ambition that has been met with skepticism. EDF is already building Hinkley Point C, the first new atomic station in more than three decades, and the project is running over budget and taking longer than planned. Taxpayers aren’t liable for any extra construction costs incurred for that plant — which uses a different model than Sizewell.

The government is seeking private investors for Sizewell in the hope that EDF can make a final investment decision next year and begin construction.

Last week the company said that a 15-month delay is looking more likely to the start up of Hinkley Point C after construction setbacks. The two reactors, costing as much as £32 billion ($41.2 billion) combined, are due to start operating in 2027 and 2028.

Smaller modular reactors could provide a cheaper alternative to large-scale plants, as the UK aims to achieve a zero-carbon power grid by 2035, according to the committee report.

“Gigawatt-scale nuclear projects cost tens of billions of pounds to plan and construct before a single unit of electricity is generated,” it said. “Their long period of construction, complexity, and subordination to potentially variable regulatory standards have been associated with large cost-over runs and delays. For all of these reasons, and more, the financing of gigawatt-scale new nuclear power has proved formidably challenging.”

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