Sizewell C’s financing places more risks on public purse ‘than other electricity projects’

That DESNZ went ahead with the Sizewell C investment decision on the basis that consumers would not benefit until 2064 beggars belief.

New Civil Engineer 20 May, 2026 By Tom Pashby

The financing of Sizewell C has been scrutinised by the National Audit Office (NAO), which found it “places more risks on taxpayers and consumers than other electricity projects” and that benefits to consumers will only outweigh costs after 2060.

In July 2022, the Department for Energy Security and Net Zero (DESNZ) announced it had secured the final investment decision (FID) for the project on the Suffolk coast, which is expected to produce 3.2GW of electricity.

Achieving the FID meant that investors and the government had agreed the terms on which investment would be put into the project, how returns on investment would work, and what this meant for consumers.

The government confirmed that the project would cost “around £38bn”, nearly double the original £20bn estimate stated by EDF in 2020.

Today’s [20 May] NAO report, simply titled Sizewell C, assessed “the implications of the deal for taxpayers, electricity consumers, and investors, and provides a baseline against which progress can be measured.”

A statement from the NAO, announcing the report, said DESNZ’s “delivery model for Sizewell C places more risks on taxpayers and consumers than other electricity projects, but the Department believes this model has reduced finance costs and will allow the project to be delivered on time and to budget.”

It added that the “novel approach has costs and relies on big assumptions

Once construction at the plant has been completed, the government’s modelling “predicts that the net benefits for consumers could be up to £18bn, primarily delivered through energy bill savings and reduced electricity costs compared to other ways of reaching net zero,” the NAO said.

“However, as a large infrastructure project, DESNZ’s modelling of these benefits shows they will not outweigh the costs to consumers until after 2060.”

The report also assessed the claims by Sizewell C that it will be easier to build because it is largely copying the designs of Hinkley Point C.

The NAO pointed out that Hinkley Point C “is currently expected to cost double its initial projected cost, with a seven-year delay”, and that this “has sparked concerns that these problems may be mirrored in Sizewell C”.

The spending watchdog said DESNZ hoped to avoid repetition of mistakes by “applying the lessons and final designs from Hinkley Point C”, and, as such, “Sizewell C’s plans are already at a much more advanced stage than Hinkley’s were at the equivalent point”.

NAO head Gareth Davies said: “Sizewell C forms a significant part of the government’s plan for a secure and affordable clean energy supply. There has been a concerted attempt to learn from the problems of previous nuclear power construction projects and other large infrastructure schemes.

“This has resulted in a novel financing structure and DESNZ will need to monitor the risks to taxpayers and billpayers closely.”

Public Accounts Committee chair Geoffrey Clifton-Brown commented on the report, raising concerns about the “substantial” risks of Sizewell C, which are being borne by the public.

“Sizewell C is a project of exceptional scale, complexity and significance for taxpayers. Costs are estimated to be £38.2bn, largely financed by government”, he said.

“While the potential benefits are considerable, they remain uncertain; by contrast, the risks are immediate, substantial and borne by the public. Consumers are already contributing through their electricity bills, and the government has assumed most of the project’s financial risk.”

He added: “Experience from comparable nuclear projects in the UK and overseas highlights their vulnerability to delays and cost overruns.

“Although the government has introduced a new delivery and financing model to mitigate these risks, it must now ensure it works in practice through close monitoring, greater transparency to Parliament, and by securing value for money from the significant public and private investment.”

Reaction to the report..…………………………………………………………………………………………………………….

University of Greenwich emeritus professor of energy policy Steve Thomas gave NCE his reaction to the NAO report, asking, “Is this the best NAO can do after a year of effort?”

He pointed to a line from the NAO press release about the report, which said: “Sharing risk between the investors and taxpayers and consumers appears to have reduced the cost of financing Sizewell C, but the rewards for investors still appear high.”

He said the statement that financing costs had been reduced was “rubbish on two grounds”.

“First, the finance costs are being paid by consumers in the construction period under the RAB (Regulated Asset Base) surcharge. Getting someone else to pay does not reduce them, it just shifts them.

“Second, the finance is being provided by the government National Wealth Fund and the interest rate will be whatever the government tells it to charge, so if finance charges are lower because the interest rate is reduced, that is because the government has imposed the interest rate.”

The press release also said: “Investor financial returns will cost consumers over £4bn but will be justified if they help the project to cut construction costs and speed up delivery times.” Thomas described this as “unclear”.

He said: “If it refers to the 4.8% of the 10.8% real rate of return investors will be given, that will be a gift from consumers to investors, it is an underestimate. Centrica says that of its £3bn equity contribution, only £1.3bn will come from itself, the rest will come from this 4.8% which investors are required to use as equity contribution.

“Centrica euphemistically describes this as ‘RAB Growth’.”

The NAO statement adds that DESNZ assumes “the involvement of private investors is justified, as their expertise will reduce construction costs and speed up delivery.”

In response, University of Greenwich academic Thomas asks: “What expertise does La Caisse, Centrica, NLF have on building nuclear projects? EDF has expertise but that didn’t stop Hinkley, Flamanville, and even Taishan going horribly wrong.”

He also questions the government’s use of £38.2bn as a baseline cost for Sizewell C, describing it as “wrong”, because the lower regulatory threshold cost is £40.5bn, which the government is using as its central estimate.

“£38.2bn is clearly the lower end of the range. A very basic element of project appraisal is to use central estimates, not bottom of the range ones,” he added.

A Stop Sizewell C spokesperson told NCE that the campaign group shares a lot of the NAO’s concerns, and asked for the government to commit to a public, “realistic” completion date for the project.

“The NAO’s report confirms what we already suspected – that ‘big assumptions’ and the ‘significant uncertainty’ of factors underpinning DESNZ’s claimed benefits could easily turn Sizewell C into a financial disaster, with its investors – thanks to RAB – being the only ones who can’t lose,” the spokesperson said.

“As the NAO confirms, households are relying on those investors to produce significant savings and reduce Sizewell C’s construction time to justify the nuclear tax on our energy bills, but we share the NAO’s questions about whether investors can or have the incentives to do this.”

They added: “We had asked the NAO to look at Sizewell C before it reached Final Investment Decision and are dismayed it did not do so, but at least some critical information withheld by the government is now in the public domain.

“We agree with the NAO that DESNZ must provide transparency of forecast cost and schedule for Sizewell C. We call for the government’s promised Sizewell C Strategy and Delivery plan, containing a public, realistic completion date, to be laid before parliament immediately.”

Together Against Sizewell C (TASC) also called for the NAO to “carry out a review of the Value for Money assessment supporting the government decision” to pursue Sizewell C.

TASC spokesperson Chris Wilson told NCE: “The NAO report regarding the Sizewell C project confirms that this government’s ideological pursuit of nuclear power is based on hope and belief rather than objective judgement.

“Ignoring all the warnings and project risks, the usual optimism bias regularly expounded by the nuclear industry is there in spades, at the same time negative assumptions are made about the cost of renewables

“That DESNZ went ahead with the Sizewell C investment decision on the basis that consumers would not benefit until 2064 beggars belief.

“The NAO report highlights a stark imbalance in DESNZ’s Sizewell C funding model: the investors are shielded from risk while reaping massive profits, leaving the public purse and electricity consumers to shoulder an unfair and excessive financial burden.”

Wilson added: “A major concern highlighted by the NAO is the lack of incentive for EDF to complete Sizewell C on time and budget – they will get paid to develop and supply major components while receiving a guaranteed return on their investment.

“EDF have been involved in every previous EPR reactor project and all of them have gone woefully over time and budget – they now have the added distraction and priority of building the new EPR2 reactor programme in France. What could possibly go wrong?”