Source · Select Committees · Science, Innovation and Technology Committee
Recommendation 41
41
Rejected
Paragraph: 219
Publish detailed financial figures on construction risk and cost to taxpayers for new gigawatt nuclear.
Recommendation
So far, the Government has not published financial figures which allow the cost of this risk transfer to be known. The Government must publish figures, before signing contracts for new gigawatt-scale nuclear, which allow a proper assessment of value for money to be made, including setting out the level and potential cost of construction risk to be borne by the consumer or taxpayer.
Government Response Summary
The government stated that while capital costs are under scrutiny, publishing sensitive financial information, including construction risk costs, prior to a final investment decision (FID) could undermine negotiations. It reaffirmed its commitment to publish a value for money assessment before taking an FID for Sizewell C, having already published one at the designation stage.
Paragraph Reference:
219
Government Response
Rejected
HM Government
Rejected
The capital costs for Sizewell C are subject to continued scrutiny and due diligence, and are taken account of as part of value for money approvals. During passage of the Act, the Government committed to publish value for money assessments “at two key points in the approval process: both when designating a project company in its final designation notice, and once the outcome of negotiations and market engagement have been reflected in project costs.” For Sizewell C, we have fulfilled the first part of this commitment, by publishing our summary value for money assessment in the reasons for designating Sizewell C to use RAB – this analysis shows that the project is likely to be value for money, in all but a remote scenario where cost of capital is high and energy demand is low. We have also committed to set out an assessment of Sizewell C’s value for money prior to taking a final investment decision in the project. As was argued during passage of the Act, it is important that the Secretary of State – with their responsibility for designating projects to use the RAB model and for negotiating project licence modifications to implement RAB’s – has the freedom and authority to negotiate the best deal for consumers and taxpayers. Publication of potentially sensitive information prior to a final investment decision could undermine this objective. Rigorous due diligence and development of the project is ongoing, and we started the pre- qualification process for potential investors on 18th September 2023, as the first stage of an equity raise process for the project. Our approach has potential to result in a positive value-for-money outcome for consumers and taxpayers, with private investors bringing experience of large-scale nuclear or energy project delivery and the RAB structure incentivising.