Households will start paying for Sizewell C years before the nuclear plant generates any electricity, the National Audit Office has warned.
The watchdog said the government’s new funding model for the Suffolk project could reduce financing costs but also places more risk on taxpayers and consumers than other electricity schemes.
Gareth Davies, head of the NAO, said:
“There has been a concerted attempt to learn from the problems of previous nuclear power construction projects and other large infrastructure schemes.
“This has resulted in a novel financing structure and DESNZ will need to monitor the risks to taxpayers and billpayers closely.”
The plant is expected to cost £38.2bn and is due to complete construction by summer 2039, when it could generate enough electricity to power the equivalent of 6 million homes for 60 years.
The Department for Energy Security and Net Zero reached a deal with EDF and other investors in 2025 to construct and operate Sizewell C.
But consumers started paying towards the project after November 2025 through their electricity bills.
DESNZ expects the cost for a typical household to rise by £4 in 2025-26, increasing to between £17 and £19 a year by the time the plant opens.
The department argues the model will ultimately save money by lowering finance costs and supporting a secure source of low carbon baseload power.
Its modelling suggests Sizewell C could deliver up to £18bn of net benefits over its operational life, mainly through lower electricity costs compared with other routes to net zero.
But the NAO said those benefits are not expected to outweigh consumer costs until after 2060 and remain highly uncertain.
The report warned the assumptions could change if other clean energy technologies become cheaper or more effective before Sizewell C starts operating.
Under the new structure, risk is shared between investors, taxpayers and billpayers, with government providing most of the finance while holding only a minority stake in the company delivering the project.
DESNZ says this deliberately limits government control and is designed to avoid governance failures seen in previous mega projects.
But the NAO said the approach relies on major assumptions, including the idea that private investors will help cut construction costs and speed up delivery.
Investor returns are expected to cost us between £4bn and £4.5bn, unless they help reduce costs or shorten delivery times by a matching amount.
The watchdog said it was not clear how strongly the deal incentivises investors to keep construction costs down.
It noted that even if costs rise to just below the higher regulatory threshold of £47.7bn, investors could still earn returns comparable with other utilities.
The report also compares Sizewell C with Hinkley Point C, which is now expected to cost twice its original estimate and is running seven years late.
DESNZ hopes Sizewell C can avoid the same mistakes by applying lessons and final designs from Hinkley, meaning the project is more advanced than Hinkley was at the same stage.
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