‘Top-up payments’ could hugely inflate Hinkley Point C costs

Sign for Hinkley Point C nuclear power plant

The National Audit Office (NAO), the UK’s government spending watchdog says the Hinkley Point C nuclear power project could cost energy consumers à‚£30bn in “top-up payments” due to falling wholesale power prices.

The NAO’s report stated that taxpayers could end up with a range of other payments under debt guarantees agreed by the government with EDF, the French utility wishing to develop the project.

There could also be potential liabilities for disposing of spent fuel and meeting claims in the event of a nuclear accident, argues the NAO, which says renewables may be cheaper.
Hinkley Point C
The report has been dismissed by the department for energy and climate change (DECC) and EDF.

“We estimate that the value of future top-up payments under the proposed HPC [Hinkley Point C] CFD have increased from à‚£6.1bn in October 2013 when the strike price was agreed, to à‚£29.7bn in March 2016,” says the report.

Under the terms of the subsidy scheme, the British consumer must compensate EDF for lower wholesale electricity prices, but energy values have plummeted in recent years largely due to a fall in the cost of fossil fuels.

DECC told the Guardian newspaper that the à‚£37bn figure from the IPA was provisional and insisted bill payers would not pay more. It said the latest figure of à‚£30bn from the NAO is based on power prices continuing to fall for the full 35 years of the subsidy scheme which it believes is highly unlikely.

“Nuclear is not just a nice-to-have. It is an essential part of our plan for a 21st century energy system that will power homes and businesses with reliable, low carbon electricity,” the DECC said. “Hinkley will generate enough low carbon electricity to power 6m homes and around à‚£10 from consumer bills will pay for it once it is up and running.”

The potential costs of waste mentioned by the NAO should be balanced against the fact that this would be the first nuclear plant built in this country where the cost of the clean-up is essentially borne by the developer.

EDF dismissed the NAO’s assessment on Hinkley. “Short-term changes in today’s wholesale energy prices do not change the long-term case for Hinkley Point C,” it said.

“It will produce electricity in the 2020s and beyond, helping the UK replace older polluting plants with reliable low carbon electricity available even when the wind doesn’t blow or the sun doesn’t shine. Its cost will be competitive with other forms of low carbon generation and consumers won’t pay a penny until the plant begins operating.”

The French company is set to make a final investment decision in September.

Hopes by the project’s opponents that it would be axed as a result of Brexit were not supported by the newly appointed Chancellor of the Excehquer Philip Hammond on BBC4’s Today programme on Thursday when he said Hinkley Point C “will make a huge contribution”. “We have to make sure that that project goes ahead”

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