Today’s report from the National Audit Office criticises the Department for Business, Energy and Industrial Strategy’s approach to the scheme.
NAO head Amyas Morse said: “The department has committed electricity consumers and taxpayers to a high cost and risky deal in a changing energy marketplace.
“Time will tell whether the deal represents value for money, but we cannot say the department has maximised the chances that it will be.”
The agreement will see the NNB Generation Company Limited (NNBG) build and operate HPC at an estimated cost of £18bn. NNBG is owned 66.5% by French energy firm EDF and 33.5% by the China General Nuclear Power Group.
Under the agreed contract, NNBG will receive a fixed price of £92.50 for each megawatt hour of electricity that it sells into the market for 35 years.
NNBG will receive top-up payments if the market price is lower and, conversely, payments will flow in the opposite direction if wholesale prices rise above the strike price.
The NAO estimates the costs of the top-ups could reach £30bn, up from the original estimate of £6bn, for the life of the contract.
Today’s report states: “The current structure of the deal means that the costs of HPC will be met by electricity consumers rather than taxpayers.”
However it notes: “A failure by government to assess the impact of its policies on consumers could lead to consumers facing financial hardship, and unplanned taxpayer support being required.”
The report highlights that when the department finalised the deal in 2016, its value-for-money tests showed the economic case for HPC was “marginal” and subject to “significant uncertainty” as the economic case for nuclear power have “deteriorated”.
A spokesman for EDF Energy said: "The report shows that Hinkley Point C remains good value for consumers compared with alternative choices.
"Consumers won’t pay a penny until the power station is operating and it is EDF Energy and CGN who will take the risk and responsibility of delivering it.
"The project is having a major impact on the UK’s industrial capacity, jobs and skills. Relaunching the UK nuclear new build industry at Hinkley Point C will enable costs for future projects, in particular Sizewell C, to be lower."
A spokesperson for the BEIS department, said: “Hinkley Point C will be the first new nuclear plant in a generation. This was an important strategic decision to ensure that nuclear is part of a diverse energy mix.
"Consumers won’t pay a penny until Hinkley is built; it will provide clean, reliable electricity powering 6 million homes and creating more than 26,000 jobs and apprenticeships in the process.”
