French utility EDF today raised its cost estimate for the Hinkley Point C power station in Somerset by £1.5bn and said the project faces delays.
After a review of the costs and timetable of the project, EDF said the price tag for the country's first new nuclear power station since 1995 will rise to £19.6bn.
The state-owned energy firm's increased estimate comes mainly as a result of "a better understanding of the design adapted to the requirements of the British regulators, the volume and the sequencing of work on site and the gradual implementation of supplier contracts".
EDF's projected rate of return (IRR) is now estimated at about 8.5 per cent compared to about nine per cent initially.
The firm added Hinkley Point faces a deferral of delivery (COD) of 15 months for unit one and nine months for unit two, which could add a further £0.7bn in 2015 sterling and take the IRR to around 8.2 per cent.
Vincent de Rivaz, chief executive of EDF Energy, said the new cost estimates and delivery delay will not impact the contract signed between the company, the UK government and partners, according to Reuters.
A spokesperson for the Department for Business, Energy and Industrial Strategy (Beis) said: “As the developer has made clear the project remains on track to meet its first major milestone in 2019. The UK government negotiated a competitive deal which protects consumers and ensures that all of the cost of construction, including any overruns, sits with the contractor."
Consumers won’t pay a penny until Hinkley is built.
EDF management aims for unit one to be complete at the end of 2025, and it said it will continue to identify and implement action plans to reduce costs and risks.
Last month, the National Audit Office (NAO) condemned the power station as a “risky and expensive project with uncertain strategic and economic benefits” in a hard-hitting report.
The NAO said value-for-money tests showed the economic case was “marginal” and subject to significant uncertainty.
The construction of Hinkley Point C has already faced a number of delays, and the UK government has come under fire for striking a deal which guarantees a price for electricity that is higher than current market prices.
Hinkley is expected to generate around seven per cent of the UK's expected electricity requirement from the mid 2020s.