nuclear-news

Sizewell C loans could see project cost rise above Hinkley to £47.7bn

The National Wealth Fund said it will provide a loan facility for the nuclear power station of up to £36.6bn, pushing the upper limit to £47.7bn.

July 22nd 2025, https://www.energyvoice.com/renewables-energy-transition/576872/sizewell-c-loans-could-see-project-cost-rise-above-hinkley-to-47-7bn/

Project costs for the Sizewell C nuclear power station could rise to an upper threshold of £47.7 billion as a result of a new government loan extension.

The National Wealth Fund (NWF) has increased the size of its loan facilities to provide a debt buffer in case project costs rise, the government has confirmed.

The government’s new sovereign fund said in a statement that Treasury has recapitalised the fund from a prior capitalisation of £27.8bn so it can provide a loan facility for nuclear power station Sizewell C of £36.6bn.

The NFW, which started operating in October, will act as a lender of record for the project and continue to have the capacity to invest across its mandated sectors, a spokesperson said.

According to the statement, an additional £5bn of debt will be guaranteed by France’s export credit agency Bpifrance Assurance Export.

An energy department spokesperson told Energy Voice that “in order to finance a project of this size, the project partners have made available finance to fund costs up to £47.7bn (real) to safeguard taxpayers in the event of cost overruns”.

“This is based on a remote scenario for the project and is not what the company is managing the project to,” the government spokesperson said.

“The central target in terms of costs is around £38bn real, but as is standard for big and complex projects, we have secured a financing which contains contingency in case of overruns.”

According to people close to the matter, one of whom cited project documents, while Sizewell C is estimated to cost £38bn, the lower threshold for financing is £40bn, with a higher upper threshold of £47.7bn.

The newly secured loan capital would raise the projected upper limit of financing for the power station by nearly £10bn if it was fully drawn down over the course of the project’s lifecycle, they indicated, although a spokesperson for the fund said that would be unlikely. He said the facility provided for the effect of inflation.

“It is likely that NWF would not be exposed to the full amount of its debt provision, meaning its total debt exposure is likely to be less than the nominal maximum it has provided for,” the fund’s spokesperson said.

This increase would provide for a maximum project cost of £47.7bn, which would make the nuclear project more expensive than stalled Somerset nuclear power station Hinkley Point C, which is estimated to cost in the region of £46bn.

The UK Department for Energy Security and Net Zero (DESNZ) confirmed this morning that it had secured investors to commit a total of £38bn to Sizewell C. That included investment commitments from EDF, Centrica, Amber Infrastructure Group and Canadian fund La Caisse.

Together Against Sizewell C chair Jenny Kirtley said: “The scale of potential exposure of public funds to the Sizewell C project is revealed as a staggering £54.589bn in the government’s FID subsidy scheme.

“So much for claims made by EDF and government that there would be huge cost savings from ‘lessons learned’ from the Hinkley Point C build.”

She added that “future generations will have the responsibility to protect the Sizewell C site until the late 2100s and are depending on us to get it right”.

Sizewell C, which reached a final investment decision in the early hours of Tuesday, is expected to be a more efficient replica than its delayed and long-awaited Somerset counterpart, with efficiencies estimated to be between 20% and 25% greater than the first two reactors at Hinkley.

Supply chain ‘incentivised to keep costs down’

Investors insist that they are confident that costs will not overrun, yet Somerset nuclear power station Hinkley Point C is years overdue and over budget.

“The project supply chain is strongly incentivised to keep costs down and investors will see lower returns if there are overruns, reducing risk for taxpayers,” DESNZ told Energy Voice by email.

The new Suffolk nuclear power station at Sizewell is expected to be delivered by the mid-2030s.

Yet Hinkley Point C, which secured a contract-for-difference to operate in 2015, is still not fully built.

Project owner EDF received a dressing down from the French auditor earlier this year, which insisted that it should refinance Hinkley before investing in another nuclear power station in the UK, Sizewell C.

EDF has subsequently reduced its stake to 12.5%, representing an equity commitment of £1.1bn. Centrica has agreed to invest £1.3bn in a 15% stake, while Amber Infrastructure Group and Canadian fund Le Caisse have committed to take an initial 7.6% and 20% stake respectively.

The UK government said it will initially take a stake of 44.9% in Sizewell C, which is expected to reduce if Amber and La Caisse’s combined stake rises to 30%, according to a person familiar with the matter.

July 27, 2025 - Posted by Christina Macpherson | business and costs, UK