NAO Report on Hinkley Point Nuclear Power Deal – Very Critical

Over on our Public Spend Forum site, we wrote last week about the National Audit Office publishing a damning report into the Department for Business, Energy and Industrial Strategy and their Hinkley Point C nuclear power deal, entered into with providers EDF and China General Nuclear Power Group (CGN).

In it we take a good look at the report and consider what the deal means for the good old British taxpayer and consumer. The Department for Business, Energy and Industrial Strategy, which is responsible for this programme, does not come out of this well at all. We suspect there’s a fair chance that many senior civil servants in the Department will privately think this is a lousy deal too! As the report call it - expensive and risky!

We will very likely be paying far more for our energy in the future, as the report says: “the Department has not sufficiently considered the costs and risks of its deal for consumers. It only considered the impact on bills up to 2030, which does not take account of the fact that consumers are locked into paying for Hinkley Point C long afterwards. It also did not conclude whether the forecast top-up payments are affordable”.

Economically, the deal was always marginal at best and subject to significant uncertainty. There is also every chance that the cost will go up further; current construction costs are estimated at £18 billion, but some experts predict it will be nearer to £30 billion.  There is also a fair chance that the project will fail completely. EDF is under increasing financial pressure, and as the NAO says in a particularly worrying paragraph:

There are no examples of HPC’s reactor technology (the European Pressurised Water Reactor, EPR) working anywhere in the world. Other projects to build nuclear power stations using EPR technology in France, Finland and China have been beset by delays and cost overruns.

The NAO makes a range of useful recommendations, covering both oversight, governance and contract management for this programme and some thoughts on wider issues and subsequent energy infrastructure projects. Let’s hope that having got into this situation, the Department puts all necessary effort into making sure the management of the programme is as competent and effective as possible.

To read the fuller article, please visit UK’s National Audit Office Slams Nuclear Deal.

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