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  1. ITV Report

"High cost and risky deal" for Hinkley Point C

There's a 9 year schedule for the build. Photo: ITV West Country

The Department for Business, Energy and Industrial Strategy's deal for Hinkley Point C has locked consumers into a"risky and expensive project" with uncertain strategic and economic benefits, according to today's report from the National Audit Office.

  • The National Audit Office is an independent body that scrutinises public spending for Parliament.
Hinkley was given the go ahead last September. Credit: PA Images

When the government finalised the deal in 2016 its value-for-money tests showed the economic case for Hinkley Point C was marginal and subject to significant uncertainty.

EDF Energy is set to start generating energy from the nuclear power site by the end of 2025. Credit: PA Images

Less favourable, but reasonable, assumptions about future fossil fuel prices, renewables costs and follow on nuclear projects would have meant the deal was not value for money according to the Department's tests.

The Department has committed electricity consumers and taxpayers to a high cost and risky deal in a changing energy marketplace. Time will tell whether the deal represents value for money, but we cannot say the Department has maximised the chances that it will be.

– Amyas Morse, head of the National Audit Office

Today's report says the costs and risks of its deal for consumers haven't been properly considered.

The government only considered the impact on bills up to 2030, which does not take account of the fact that consumers are locked into paying for Hinkley Point C long afterwards.

It also did not conclude whether the forecast top-up payments are affordable.

£18bn
estimated cost to construct Hinkley Point C (in 2016 prices)
7%
proportion of UK's estimated electricity requirement met by output from Hinkley Point C in mid 2020s
£10-15
average annual household contribution towards supporting Hinkley Point up to 2030

The report makes clear that it will not be known for decades whether Hinkley Point C is value for money. It will depend on whether the current contractual arrangements last, along with external factors - in particular, future fossil fuel prices, the costs of alternative low-carbon generation, and developments in energy technology and the wider electricity system.

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The auditors say the government must now ensure it has the right oversight arrangements in place to manage the contract in a way that maximises Hinkley Point C's value for consumers and taxpayers.