The UK’s Hinkley Point C nuclear plant is already £1.5bn over budget and could be 15 months late, which would push cost overruns to £2.2bn, its main developer, France’s EDF, has admitted.
EDF said a review of the twin-reactor project had concluded it would be significantly more expensive than planned and risked being delayed.
Hinkley Point C was supposed to cost £18bn and generate first power by the end of 2025.
But now EDF says costs are expected to be £19.6bn but the figure could hit £22.3bn if the expected delays occurred.
The first reactor risked being delayed by 15 months – pushing first power to 2027 – and the second reactor risked a nine-month delay, EDF said.
EDF said the £1.5bn cost overrun now confirmed resulted "mainly from a better understanding of the design adaptated [sic] to the requirements of the British regulators, the volume and sequencing of work on site and the gradual implementation of supplier contracts".
It is the second cost hike increase for the project after the price climbed from £16bn to £18bn in 2015, reflecting the impact of inflation.
Embarrassingly for EDF, this latest cost hike will invite comparisons to its two other European nuclear projects – Flamanville in France and Olkiluoto in Finland – which also use the EPR design of reactor and which are each billions of dollars over budget and years behind schedule.
The bad news comes less than two weeks after UK government spending watchdog, the National Audit Office, released a damning report saying the UK government had put consumers and taxpayers at risk in its deal with EDF and the Chinese company CGN.
EDF and CGN, a one-third owner of the new plant, are bearing the cost and risk of building Hinkley Point C. They will recoup their costs through a guaranteed price for the electricity set at double today’s wholesale electricity price, a deal set to last for 35 years.
EDF said that if the £2.2bn cost increase came to pass, its rate of return on the project would drop from 9% to 8.2%.
Opponents used the news to call again for the project to be scrapped.
John Sauven, executive director at Greenpeace UK, said: "Hinkley is already over time and over budget after just a few months of building work. Today’s news is yet another damning indictment of the government’s agreement to go ahead with this project."
But according to The Times, the UK government cannot cancel Hinkley Point C without risking triggering up to £22bn in compensation payments to EDF. It will only be free to cancel it if the plant is eight years late.
EDF said its management was still "mobilised on the initial delivery objective" of first power by the end of 2025 and was working on "identification and implementation of action plans to reduce costs and risks".
EDF added that it stood by a previous target of pouring the first nuclear safety-related concrete for the first of the two reactors in mid-2019 but said this was dependent on the final design being completed by the end of 2018 and warned that that was "on a tight schedule".
Paul Dorfman of the Energy Institute at University College London said: "It seems that no lessons have been learned from the failing EDF new nuclear constructions in France and Finland, which are both hugely over cost and over time.
"Before the first concrete has been poured, EDF add billions onto the costs, which can only ramp over time.
"Inevitable delays to Hinkley means that UK energy policy climate targets will be further endangered."
A government spokeswoman 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.
Photograph: Contractors pour concrete at Hinkley Point C nuclear power station in Somerset, England, in 2017 (EDF)