UK nuclear investors get 'high' returns for lower risk than consumers, who also foot the bill

UK nuclear investors get 'high' returns for lower risk than consumers, who also foot the bill

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UK nuclear investors get 'high' returns for lower risk than consumers, who also foot the bill Sizewell C could add £19 to yearly bills, spending watchdog says, but private investor may fail to keep costs down

Lindsay Clark Lindsay Clark

Published fri 22 May 2026 // 09:30 UTC

The UK’s £38.2 billion (c $51 billion) Sizewell C (SZC) nuclear reactor is set to offer investors high rewards for little exposure to risk, while the consumer will see a £19 ($25.50) annual hike to their bills, according to a public sector spending watchdog. A report from the National Audit Office on plans for building the second in a new generation of nuclear power plants — Sizewell C in Suffolk — finds that the current estimated impact on consumers “relies on some big assumptions” about chance of further cost increases. Gareth Davies, head of the NAO, 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.”

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Construction started in April 2024, although the Department for Energy Security & Net Zero (DESNZ) did not finalize its deal to complete the build with French energy firm EDF until July 2025. The government chose to create a joint venture company — Sizewell C Ltd — with DESNZ taking a minority stake and private investors, including EDF, taking the lion's share. The government’s National Wealth Fund will provide £36.6 billion (c $49 billion) in finance, while £5 billion will come from commercial lenders.

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The project plans to keep costs down by learning lessons from Hinkley Point C (HPC), which is expected to start generating electricity in 2030 after originally targeting 2025. In addition to the delays, cost have climbed to £35 billion from an initial estimate of £18 billion. The mammoth building project is part of the government's plans to meet rising demand for electricity — not least from datacenters and electric vehicles — while achieving its targets for reducing greenhouse gas emissions and reaching net zero. The government expects SZC to power the equivalent of 6 million homes for at least 60 years.Even though the Sizewell C company claims its build plans benefit from delays to Hinkley Point C, and will cost less to build, consumers may still end up paying more for the electricity the new plant produces because Hinkley Point C's "price was set before its cost overruns and SZC is affected by the rise in borrowing costs since then,” the NAO said. Part of the build cost will come from an increase in household electricity bills of £4 in the current financial year, rising to a peak of £19 to £21 a year in the first decade of the plant’s operation. The government admits that electricity from SZC will be more expensive compared with other forms of renewable generation, but it argues there is an overall benefit in the mix of supply. Solar and wind power are cheaper on the face of it, but they are also unreliable, creating hidden costs in balancing the energy grid. “DESNZ’s modelling shows lower total system costs with SZC. This is because intermittent renewables require additional transmission infrastructure, reserve generation capacity, and other balancing services, which those standard generation cost metrics do not capture,” the report said. The NAO points out that the current estimated costs rely on some “big assumptions.” At the same time, private investors' exposure to risk is not balanced with their rewards. A "government support package" provided by DESNZ includes contractual commitments that limit risks to private investors of cost overruns and certain unlikely but high-impact risks. This means private investors share construction risk with consumers and taxpayers but are exposed to “tail‑end” scenarios above the higher regulatory threshold, in a deal designed to attract private investors.

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“The sharing of risk with the taxpayer and consumer appears to have reduced the cost of financing the project, but the rewards for investors still appear high, given their limited exposure to project risk. The extent to which investors will be incentivized to control project costs in the way DESNZ assumes is unclear,” the report said. Only future generations may discover whether the project is worth it in the end. “The modelled benefits only start to outweigh those costs after 2064,” the NAO said. ®

power nuclear power national audit office united kingdom systems

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