INSIGHT | FINANCE, RISK, PROCUREMENT
adds, “the rewards for investors still appear high”. It continues, noting that “Investor financial returns
will cost consumers over £4 billion but will be justified if they help the project to cut construction costs and speed up delivery times.” So, cost and time, and funding combinations, are
the big variables in play. Risks, which the government believes the variables to be locked down. However, infrastructure projects are no unfamiliar with
challenges of time and money, along the way to being built, or when while under construction. When such difficulties do arise, typically there are consequences for the execution of the project, often felt throughout, and affecting design and construction plans and efforts. That the NAO has thought it worthwhile to flag funding
risks with the Sizewell C delivery model is a caution. Sizewell C is scheduled to be commissioned and start
TBM finishes on Bromford Tunnel, HS2.
and, ensuring that the right skills are in place to deliver the rest of the programme. The latter includes an overhaul of HS2 Ltd itself. Internal reviews of HS2 Ltd, notes NAO, “found it was
poorly structured to deliver the revised programme scope and lacked key delivery and contract management skills.” The slower trains? Part of the reason is to save time
and money by not needing to assure project rail systems and track able to handle the high speed of 360km/hr. No such track exists in the UK or the project. Instead, 320km/ hr (200 mph) is now deemed a sufficient top speed, as in continental Europe and Japan - where they have long experience in building such projects. Long-term, NAO says, the economics suggest loss of benefits will offset the construction cost savings. And, of course, slower track is locked in - so why even
to have scoped for it in the first place? A question put aside, perhaps. For the focus seems to only get it finished, and well, with more time and cost certainty, and to get passengers on trains sooner than would otherwise be the case. All that said, NAO is recommending a review this autumn of the reset status and plans, “to assess whether it remains achievable.”
SIZEWELL C The NAO did not explicitly mention ‘tunnels’ in its report on Sizewell C, released in May, but given that there are such works in the complex project it is prudent to know more the warning about “big assumptions” being relied upon and a need to “monitor risks closely” in the government’s “novel finance structure” for the nuclear power station development. The risk caution raised by the NAO primarily comes
from the funding deal for the project, which it appears to view as good for investors at the expense of taxpayers and consumers. The deal is “believed” to results in lower financing costs through the ‘risk sharing’, but would see higher electricity bills for consumers to help pay towards construction of the project, says NAO. In that regard, it
32 | July 2026
generating electricity from 2039. The Department for Energy Security and Net Zero (DESNZ) developed the delivery model for Sizewell C. The NAO says that the department “believes this model has reduced finance costs and will allow the project to be delivered on time and to budget.” The delivery model is with DESNZ in a deal that was
reached with energy utility EDF and other investors to construct and operate Sizewell C. While noting that Sizewell C is a significant part of
the government’s plan for a secure and affordable clean energy supply, and that there has been a “concerted attempt to learn from problems” of past nuclear power and other major infrastructure projects, a novel financing arrangement has come about in this case. NAO observes that Sizewell C is often compared
to the UK’s other nuclear power plant project, Hinkley Point C - which, it adds, is “currently expected” to cost double its initial projected sum while being seven years late. Picking up the baton, Sizewell C took lessons from Hinkley and also its final designs as part of risk mitigation - and, comparatively, NAO comments, Sizewell is now relatively ahead in its development and is anticipated to be cheaper to build. But even in being cheaper to build, the electricity
generated by Sizewell will likely be more costly than from Hinkley. Why? NAO notes that comparisons are not on the same terms: Hinkley’s electricity price was set early, before construction costs jumped, and back then what was borrowed to fund the build enjoyed less expensive cost of borrowing. What happened to fun the cost overrun? NAO notes than was taken on by EDF, developing that project too. Sizewell is in an era of more costly borrowing but
aims to be cheaper to build. Further, its incentives - from lessons learned all round - are for a delivery model that serves all parties. There has been “a new approach to incentivise contractors,” the NAO comments. But, given all that, NAO warns that the government must “monitor the risk to taxpayers and billpayers closely.” While not due to open until nearly 2040, consumers
are already paying into a model that is building Sizewell C. NAO says consumers started paying at the end of last
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