National Audit Office report highlights that the Hinkley Point C is a risky venture and a bad deal for Britain – investing in renewables must now be prioritised

NFLA media release 23rd June 2017

The Nuclear Free Local Authorities (NFLA) responds to today’s National Audit Office’s damning report on the UK Government’s deal with EDF to build a new nuclear reactor at Hinkley Point C with little surprise, as it has been consistently saying the deal is overly expensive and a bad deal for the taxpayer.

The National Audit Office (NAO) has analysed in detail the financing agreement that was made between the UK Government and EDF for Hinkley Point C, which was essential for EDF to go ahead with the deal. The decades-long deal gives EDF a guaranteed rate of return and locks the country into paying electricity prices which are currently double the existing rate for many years to come.

The NAO could not be more damning in its criticism of the Hinkley Point deal. It states:
“The Department for Business, Energy and Industrial Strategy’s deal for Hinkley Point C has locked consumers into a risky and expensive project with uncertain strategic and economic benefits. (When) the Department finalised the deal in 2016 its value-for-money tests showed the economic case for Hinkley Point C was marginal and subject to significant uncertainty. Less favourable, but reasonable, assumptions about future fossil fuel prices, renewables costs and follow on nuclear projects would have meant the deal was not value for money according to the Department's tests.

The NAO also note EDF may have to seek further financial assistance from the UK Government as their reactor design is ‘unproven’ and the company is in a financially weakened state. The NAO calculate expected costs to the taxpayer of the indirect subsidies to EDF has increased from £6 billion to a huge £30 billion. Today’s report finds that 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.”

The most damning statement by the NAO is that: “The government has increasingly emphasised Hinkley Point C's unquantified strategic benefits, but it has little control over these and no plan yet in place to realise them.” (1)

NFLA call on the new Government to urgently reconsider this overly expensive deal, which is still subject to a legal challenge from the Austrian Government currently going through the European courts.

2017 has truly seen the global renewable energy and decentralised energy revolution take off. The costs of onshore and offshore wind, solar and other forms of renewable energy are rapidly decreasing. These energy industries are now regularly producing copious amounts of electricity as fossil fuels and nuclear generation decline. In addition, there are hundreds of local authorities developing innovative low carbon energy schemes (2), and thousands of community energy cooperatives producing enough energy to power 130,000 households alone. (3)
Even the ‘Big Six’ utilities see the game is almost up. Just this week Centrica (the owner of British Gas) offloaded two large gas plants for £318 million so that it can invest in the generation of power at a smaller and local level. (4)

Following the inconclusive election result, NFLA calls on all political parties to understand the reality of the heavy financial costs of new nuclear in comparison to the rapidly declining costs of renewable and decentralised energy. With EDF also enduring major problems with its nuclear business, and under a huge debt burden, time has surely come for a completely different direction in UK energy policy.

As Paul Dorfman, NFLA’s representative to the EPA Radiation Issues Committee notes:
“The UK Parliamentary finance watchdog has to weigh its words carefully. But in civil service terms, the NAO has justly and effectively damned the Hinkley nuclear deal. The reality is that new nuclear is, quite simply, too costly. The nuclear industry rhetoric is for nuclear plus renewables. But given the reality of the economics it's nuclear or renewables. And the fact of the matter is that renewables wins hands down."  
NFLA Steering Committee Vice-Chair Councillor David Blackburn said:
“This NAO report is a devastating blow to the Government and to EDF of a dodgy deal that quite clearly does not stand up to effective scrutiny. It is clear the deal to build Hinkley Point C would lock in the taxpayer to huge financial risks that could total tens of billions of pounds. With Toshiba’s Westinghouse project at Moorside effectively mothballed, Hitachi struggling to reduce costs for Wylfa B, and the content of this NAO report on Hinkley Point, UK new nuclear is in a sorry state. At the same time renewable and decentralised energy is driving forward developing new schemes with rapidity and drastically reducing costs year on year. The Government and opposition parties urgently need to come together and completely review UK energy policy because at present it is not fit for purpose. It is time to embrace the renewable energy revolution instead.”

Notes for editors:
(1)        National Audit Office media release, 23rd June 2017
(2)        NFLA reports on decentralised energy. See and
(3)        Business Green 20th June 2017
(4)        Financial Times, 21st June 2017