Households’ £50bn bill for Hinkley project

HOUSEHOLDS could end up paying £50bn to support the new Hinkley Point C nuclear project in Somerset, according to Government figures, more than eight times the 2013 estimate.

The latest forecasts reveal that EDF’S bid to build the first new nuclear plant in a generation could cost energy-bill payers £50bn over the life of the project, up from 2013’s estimate of £6bn.

Consumers are on the hook for a far greater share of the project costs because the wholesale market price for electricity is falling steadily while nuclear power construction remains expensive and high risk. Under the 2013 agreement between the Government and French utility group EDF Energy, Hinkley is guaranteed £92.50 for every megawatt-hour (MWH) of energy produced through a combination of wholesale market prices and a levy on consumer energy bills.

At the time, the Government said this would require top-up payments totalling £6bn via energy bills to meet the “strike price”, but falling market prices have widened the gap every year since then. Two years ago the cost was estimated at £13bn, and a report from the public spending watchdog last year put it at more than £30bn.

The latest report said the cost of supporting Hinkley will continue to vary as the outlook for wholesale market prices shifts. In theory, the deal protects consumer bills if market prices surge above the £93/MWH mark, but it also erases the benefit of cheaper market prices that many believe are more likely in the future.

The chief cause of the market decline is the boom in renewable energy, which is falling in cost, as well as the crash in global oil and gas prices.

A Government spokesman said that the Hinkley contract is “an important strategic decision to ensure that nuclear is part of a diverse energy mix”.

The nuclear plant is expected to generate 7pc of the UK’S electricity for 65 years, with zero carbon emissions. EDF Energy also defended the deal, saying it is a fair one that will keep the price of electricity stable.