EDF Energy has for the first time indicated how much UK households could pay under its proposal to fund the construction of the Sizewell C nuclear plant through a new financing model, arguing it will add just a few pounds a year to the average bill.
Julia Pyke, the company’s director of nuclear development, told the BBC on Tuesday that consumers could pay about £6 a year under a proposal to fund the project, using a model where consumers pay upfront before the plant is built to reduce overall costs.
The figure, while not finalised, is the clearest sign yet of what EDF plans to pitch to ministers as it tries to win backing for the project in Suffolk, after plans for a number of new UK nuclear projects collapsed or faced sharp criticism for their costs.
The value of EDF’s Hinkley Point C facility in Somerset, which is currently under construction, has faced a barrage of questions after the UK government guaranteed to pay £92.50 per megawatt hour for electricity from the plant — roughly double the current market rate. The price is expected to rise even higher because it is indexed against inflation.
To reduce costs at Sizewell C, the company has been looking at using a model known as a Regulated Asset Base or RAB, which has been used by utilities and airports to fund construction of major infrastructure projects. This involves placing a surcharge on customer bills before the project is completed, which companies say can sharply reduce financing costs and, in the long run, allows them to pass on the savings to consumers.
But critics contend that it places more of the risk for the project’s construction on to households, while the cost of low-carbon rivals to nuclear such as offshore wind has been falling.
The government has said it plans to publish an assessment of this model by the summer.
UK business secretary Greg Clark said earlier this year that while nuclear power could play a role in decarbonising the country’s electricity system, it “must represent good value for the taxpayer and the consumer”.
Humphrey Cadoux-Hudson, EDF’s managing director of the Sizewell C nuclear project, said earlier this year that measures taken to lower construction and finance costs could keep nuclear “competitive with the total costs of alternatives”.
EDF has argued that while the cost of offshore wind has fallen to a level where it is broadly competitive, it does not include the need for back-up power from other sources when weather conditions are not right.