Data published by the government on Thursday has shown that the total estimated cost for the Hinkley Point C nuclear power plant could reach up to £37 billion.
Last year, the Department for Energy and Climate Change estimated Hinkley’s cost to be around £14.4 billion, but this latest data report has pushed the total lifetime cost of the project up to more than twice that, with questions being raised about where the funding for the increased cost will come from.
Paul Dorfman, of the Energy Institute at UCL, joins many critics of the Hinkley project in arguing that this latest figure is yet more evidence of the rampant uncertainty surrounding the project, its cost and its future generally.
He said: “This whole-life cost of £37bn is a truly shocking figure. It is an extraordinary ramp-up from last year’s figure, and just underlines how hard it is to get a real handle on the long-term cost of Hinkley.”
However, according to the DECC, the £37 billion figure is not a new real estimate, but a provisional one, set in September 2015 when wholesale energy costs were particularly low.
The DECC explain: “The Whole Life Costs (WLC) for this project are determined by the difference between the Strike Price for Hinkley Point C and the long-term Wholesale Electricity Price forecasts, which are influenced by market prices for fossil fuels.”
Given that wholesale prices are, as they explain, “volatile and sensitive to a number of uncertain factors”, the estimated whole life costs for the project are subject to change.
“We would expect the WLC to vary year on year to reflect changes in the market” the DECC said.
“From 2014 to 2015, DECC’s projections of wholesale electricity prices fell, reflecting underlying low fossil fuel prices and a subsequent reduction in DECC’s gas and coal projections. This resulted in an increase in the whole life costs for Hinkley Point C.”
Given that the £37 billion estimate was made back in September last year, despite only being published this week, both the DECC and EDF have argued that it should not be taken as a recent increase in the estimated cost but rather as a ‘snapshot’ from last year.
A spokesperson for the DECC said: “Today’s report…does not suggest that the lifetime costs of Hinkley ave increased. It is a snapshot of the position at the end of September 2015.”
They explained: “Hinkley will generate enough low-carbon electricity to power six million homes and around £10 [a year] from [each] consumer’s bill will pay for it once it is up and running. We have set the strike price to protect bill payers if energy costs go up or down, so the cost of the project to consumers will not change.”
Some have suggested that, while the majority of the bill (if indeed the cost does reach £37 billion) will be footed by taxpayers and energy consumers, some may have to be found by cutting budgets for other DECC projects and subsidy schemes. Some environmental campaigners and critics of Hinkley suggest that the increased cost would mean reduced help for renewable programs, slowing down the UK’s emission reduction progress.
Nonetheless, EDF joined the DECC is making it clear that this latest figure is misleading.
A spokesperson for the energy company said: “Hinkley Point C will generate reliable low-carbon electricity in the future, so a cost estimate based on last year’s depressed wholesale price is not relevant. HPC’s electricity will be competitive with other low-carbon energy options and consumers won’t pay a penny until the plant begins operating.”
Questions have already been being raised about the future of the Hinkley project following the Brexit vote, with some describing the ultimate decision on the investment required as something of a ‘litmus test’ for future infrastructure projects in the post-referendum, and ultimately post-EU, UK.
However, EDF management have assured, at least ostensibly, that the Brexit vote will have no direct effect on any decision regarding Hinkley’s future.
“Backed by the studies already provided to the representatives of the workforce,” they said, “EDF considers that this vote in no way changes the fundamentals of the project, nor does it alter the desire of those involved to take part in it.”
