UK households could pay £50bn to France’s state-owned energy company to prop up Hinkley nuclear plant

The Government's strike price agreement with EDF is spiralling far too high for some critics

Hinkley Point in Somerset, where plans for an EDF nuclear plant look set to cost more than bargained for (Getty)

UK households could pay £50bn for the new Hinkley Point C nuclear plant in Somerset, new government figures reveal. That number is more than eight times greater than the National Audit Office’s initial 2013 estimate that a public investment of £6bn would be required.

The spiralling costs are due to the terms of the Government’s agreement with EDF, the French state-owned electricity company, which is building the plant in conjunction with China General Nuclear Power.

That deal guarantees EDF a £92.50 “strike price” for every megawatt hour of electricity that the new plant generates, a figure that critics have said is far too high.

Electricity prices have tumbled since the terms of the deal were negotiated in 2013, leaving a yawning gap between what consumers will pay and the price that could be available on the free market.

Part of this decrease is due to falling oil prices, but it also reflects the fact that the cost of renewables, such as solar, has decreased rapidly.

The Government’s Infrastructure and Projects Authority said that wholesale prices are volatile and sensitive to a diverse range of uncertain factors.

The news comes just two weeks after a review by EDF said construction cost for the nuclear plant had increased by £1.5bn to £19.6bn, following its own review of the project.

The company said it meant its predicted rate of return on investment will fall to 8.5 per cent from 9 per cent previously.

The review, carried out after the final investment decision was made, looked into design and engineering plans, the amount of work that has to be carried out and further discussions with suppliers, EDF said.

EDF also said there was a risk of delayed delivery of the project of 15 months for Unit 1 and nine months for Unit 2, which would add a further £700m to costs.

A spokesperson from the Department for Business, Energy and Industrial Strategy said: “Hinkley Point C will be the first new nuclear plant in a generation. This was an important strategic decision to ensure that nuclear is part of a diverse energy mix.

“Consumers won’t pay a penny until Hinkley is built; it will provide clean, reliable electricity powering 6 million homes and creating more than 26,000 jobs and apprenticeships in the process.”

An EDF spokesperson said Hinkley “will be good value for consumers compared with alternative choices available in the 2020s”.