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The actual expense of building the Sizewell C power station in Suffolk might end up being tens of billions of pounds more than the official estimates once the financing costs are included, according to government modeling accessed by the Financial Times.

The UK government last week said the mostly debt-funded project would cost an estimated £38bn in real 2024 prices to build.

Under the deal’s financial setup, investors will benefit if the project costs come in under £40 billion, and they are not required to add more money if expenses exceed £47.7 billion—although this is seen as unlikely.

However, financial analysis used for the broader fundraising process—viewed by the Financial Times—shows a range of about £80 billion to £100 billion in nominal terms over the project’s construction period, once factoring in debt interest and shareholder payments.

This suggests costs around £65 billion to £80 billion in real 2024 value, although actual expenses will depend on inflation and spending patterns throughout the project’s duration.

The modeling also suggests that revenue generated from consumer bills to support the project is anticipated to be between £35 billion and £50 billion in nominal terms, varying with the project’s total cost.

This cost will be applied as an additional charge on energy bills during the construction phase, before the power station begins producing electricity. The government expects that households will pay an extra £1 per month on average during this time.

The government’s energy department last week initially declined to share details of Sizewell C’s financing costs, saying it had not published them given how variable the costs could be. 

When the FT later asked about the unpublished modelling figures, a spokesperson said the figures did not reflect consumers’ exposure to the costs, and the project would be cheaper than its sister project Hinkley Point C.

The government was the project’s biggest single investor and would recycle profits back to consumers, they added.  

Sizewell C, which is due to come online in the mid- to late-2030s, is the second large-scale nuclear power project currently being built in Britain, part of an attempt by the government to revive the sector in order to bolster supplies of low-carbon electricity. 

Its costs are under scrutiny given UK taxpayers’ and consumers’ hefty exposure to the project, and large cost overruns and delays at Hinkley Point C, which France’s state-owned utility EDF is building in Somerset. 

Sizewell C is being built under the “regulated asset base” financing model, which is designed to encourage investment and keep financing costs down by reducing the risk to investors, as they start being paid during construction rather than having to wait until the project is built. 

Private investors Centrica, La Caisse and International Public Partnerships are committing combined equity of £3.25bn, while banks backed by France’s export credit agency have committed £5bn in debt.  

Centrica, which is taking a 15 per cent stake for £1.3bn, said it was expecting returns of more than 12 per cent.

But most of the funding is coming from public sources: the UK government is supplying £36.55bn in debt to be raised on the gilt market by the National Wealth Fund, as well as £3.8bn in equity, the largest portion. State-owned EDF is supplying £1.05bn and the Nuclear Liabilities Fund £400mn. 

The energy department said: “Sizewell C will deliver cheaper clean electricity for generations for at least six decades, and analysis shows the project could save £2bn a year across the future low-carbon electricity system once operational.”

It added: “The £38bn cost of constructing Sizewell C will be spread between consumers, taxpayers and private investors, and represents a saving of around 20 per cent compared with Hinkley Point C, demonstrating the value of building a virtual replica project.”