UK lawmakers warn Sizewell C financing model raises taxpayer and consumer risks

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Sizewell C financing risks

Highlights

UK Public Accounts Committee reports Sizewell C's £40 billion funding model places disproportionate financial risk on taxpayers and consumers versus private investors.
Consumers pay during construction under the regulated asset base model, which lowers finance costs by five percentage points versus Hinkley Point C, but increases household and state exposure to overruns.
If Sizewell C's costs reach £47.7 billion, consumers could pay £21.8 billion more, while private investors may add only £30 million, despite government supplying most funding but holding only a minority delivery stake.

Parliamentary findings on funding structure

As reported by Financial Times, citing the Public Accounts Committee, the cross-party group of MPs says Sizewell C is a poor-value arrangement for British taxpayers because the public sector and consumers carry most of the project's financial exposure while private investors stand to earn significant returns.

The committee says the financing model should not be repeated in its current form. It argues that taxpayers and bill payers are assuming extraordinary risk on a project being developed by a consortium that includes the UK government and EDF, while investors are protected by terms that allow them to benefit even if the project becomes more expensive.

Sizewell C in Suffolk is designed as a 3.2-gigawatt nuclear plant that is due to supply electricity equivalent to 6 million homes for at least 60 years when it enters operation at the end of the 2030s. It is only the second nuclear plant approved in a generation after Hinkley Point C, another EDF-backed project that has also faced delays and cost overruns.

The project's construction cost, excluding finance costs, is estimated at £38 billion in 2024 prices, or about £40 billion in current money. The UK government is providing £3.8 billion in equity and almost £37 billion in loans funded through government borrowing, while EDF is contributing £1.05 billion and private investors La Caisse, Centrica and Amber Infrastructure are investing a further £3.65 billion.

Implications for bills, policy and future nuclear projects

The plant is being built under a regulated asset base model, under which consumers begin paying during construction rather than after the plant starts generating power. That approach is intended to reduce financing costs by lowering risk for developers, and the National Audit Office estimates Sizewell C's finance costs are about five percentage points below those of Hinkley Point C.

Even so, the MPs say the structure leaves households and the state exposed if costs increase. Their analysis says that if total costs rise to £47.7 billion, the upper end of the potential range, consumers could pay £9.8 billion more during construction and £12 billion more over the plant's operating life, while private investors may need to add only £30 million.

The committee also says the government may be less able to intervene if problems emerge because, despite supplying most of the funding, it holds only a minority stake in the delivery body that controls the project. MPs add that ministers had little choice but to offer generous terms because successive governments failed to create the conditions needed to attract nuclear investment on better terms.

Critics of the project are calling for an immediate cancellation. Alison Downes of Stop Sizewell C and Steve Thomas, emeritus professor of energy policy at the University of Greenwich, say the government should halt the plant before more public money is committed, while Sizewell C chief executive Nigel Cann says the project remains the right investment for Britain because it supports energy independence, lower bills and reliable low-carbon electricity over the long term.

Our previous coverage on sovereign resilience in a higher-rate environment examined how prolonged geopolitical tensions and elevated public spending are increasing refinancing and borrowing risks for governments as funding costs remain high. We noted that persistent shocks—such as energy and food price pressures linked to major conflicts—can squeeze fiscal headroom and worsen credit outlooks, with emerging and frontier markets facing the sharpest strain due to heavier interest-service burdens and narrower revenue bases.

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