Hinkley Point nuclear power station deal risky and expensive, says NAO report


The National Audit Office has claimed that the deal signed between EDF and the UK Government for construction of the country's first new atomic reactor in 20 years, Hinkley Point C, offers 'uncertain strategic and economic benefits'. 

The spending watchdog stated the UK Department for Business, Energy and Industrial Strategy’s deal for Hinkley Point C has 'locked consumers into a risky and expensive project'.

According to NAO report, the department did not thoroughly consider the costs and risks of its deal for consumers; it has only considered the impact on bills up to 2030.

The report claimed that the department did not consider that consumers would be end up paying for Hinkley Point C, potentially for decades. 

The NAO also questioned on the affordability of the estimated top-up payments.

This report comes nine months after the government granted its approval to the nuclear project.

Construction of the new £18bn nuclear power station is being financed by France and China. 

"The report claimed that this consideration does not take into account that consumers would be effectively locked into paying for Hinkley Point C for potentially decades."

Two-thirds of the project is being funded by state-owned French firm EDF, while the remaining £6bn by China.

The report finds that the department's approach to the Hinkley Point C deal has been in line with its support for other low-carbon technologies. This implies that the 'private sector bears the risk that construction costs overrun'.

In addition, the NAO indicated that alternative approaches could have reduced the total project cost but the department did not review them. 

The report also stated that it will not be known for decades whether Hinkley Point C will provide value for money. This will be based on whether the present contractual arrangements endure, in addition to external factors such as future fossil fuel prices, the costs of alternative low-carbon generation, and developments in energy technology.