Regulator flags Sizewell C cost concerns

Sizewell C’s future economic regulator has asked the energy secretary to provide certainty over costs of the nuclear mega-project.

Ofgem told Claire Countinho, head of the Department for Energy and Net Zero (DESNZ), it expects her to provide a case that the project is likely to deliver value for money in construction costs.

The regulator wrote in a letter: “We note… that the [economic regulatory regime], its fairness to consumers and taxpayers, and attractiveness to potential investors is predicated on an appropriate degree of certainty around the underlying project costs and contracts.

“This is especially pertinent given the ongoing challenges being experienced by EDF with the construction of Hinkley Point C, which shares many design elements with the proposed Sizewell C plant.”

Ofgem wrote its letter on Monday (18 March) in response to a DESNZ consultation on modifying its Regulated Asset Base funding model, which is applied to financing the project.

The £20bn nuclear power plant, developed by EDF, was granted planning permission in July 2022. Once in operation, it is expected to generate enough electricity to power 6 million households for more than 60 years.

Ministers committed £1.3bn in January for initial infrastructure works on the project.

A spokesperson for Ofgem said: “Working with DESNZ in both an advisory capacity and as a statutory consultee to its consultation, our view is that the current draft of the licence strikes a suitable balance between giving certainty to investors while making sure Ofgem has the right level of regulatory discretion to make decisions in the future.”

The government has repeatedly signalled its commitment to new nuclear construction, announcing in January it plans to quadruple the UK’s nuclear power generation to 24GW by 2050.

Prime minister Rishi Sunak announced in the Spring Budget earlier this month that the government had bought two nuclear sites from Hitachi for £160m.

The cost of building Hinkley Point C, also developed by EDF, has increased by about a third since 2015.

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