nuclear-news

A Contract for Difference for nuclear lifetime extension for Sizewell B – a nice save for the nuclear industry?

Jérôme à Paris, Jul 22, 2026

A few days ago, the British government announced the extension of the production life of the 1.2 GW Sizewell B nuclear power plant for 20 years, from 2035, and that included the fact that the electricity produced will be sold under a CfD at a price of 70.50 GBP/MWh (in 2025 prices, to be indexed). ……….

it is proper that the power also be sold to ratepayers at a fixed price. The existence of the CfD will also allow the owners to achieve a lower cost of capital (possibly through limited-recourse financing, but in any case through more favorable corporate funding as such a revenue line underpins their balance sheet), ensuring that the price achieved could be more competitive….

Secondly, this puts the production cost risk on the operator (EDF in this case, with Centrica having a 20% stake), as they will have to deliver power at a fixed price, irrespective of what they need to spend to keep the plant running (I have not checked if they can wiggle out of the contract by stopping production earlier in case it becomes too costly to run, but I see that this would have other likely consequences, including reputational, for the operator in any case). 

The third point is that this puts a very visible price tag to nuclear plant lifetime extension. There’s often the blithe assumption that existing plants can continue to run at a very low cost. This reminds everybody that it is not the case, and existing plants definitely have ongoing operating costs – and older plants have significant heavy maintenance, refurbishment and safety costs to manage. The price level proposed here can be seen as attractive for baseload decarbonated power, but it’s certainly not low or the most competitive available these days.

The big question is whether the price is actually the right one. There can only be rather limited competition for nuclear lifetime extension CfDs, so one must consider the temptation for the operator to pad its costs and ask for a price that ensures as profitable an operation as possible (I presume that the price level was negotiated on the basis of detailed cost assumptions provided by the operator and checked by the regulator and experts). There is also the risk that the operator could ask later on for relaxation of safety or other standards in order to lower its ongoing costs (including possibly via the direct or indirect threat to stop operations.

Against that is the fact that the nuclear industry cannot afford to show that it is materially less competitive than alternatives, in particular than offshore wind, the renewable sector with the most similar characteristic as nuclear (large capacity plants, higher capacity factor). If the ask price for extension is barely competitive against new-build offshore wind, what would that say about new-build nuclear? Hinckley Point negotiated a CfD a decade ago, which EDF is not very happy with, even though it is already quite a bit higher (it was 89.5 GBP/MWh for 35 years (rather than 20), indexed from 2012, which means its current level is 131 GBP/MWh, and we’re still some years before operations), given all the cost overruns experienced in the meantime……………………………….. https://jeromeaparis.substack.com/p/a-cfd-for-nuclear-lifetime-extension

July 24, 2026 - Posted by Christina Macpherson | business and costs, UK