FINANCE, RISK, PROCUREMENT | INSIGHT


year, with electricity prices rising to help towards the funding, all the way until the power plant opens. It adds: “This novel approach has costs and relies on


big assumptions”. The projected baseline cost of Sizewell C, coming


from the project company, is £38.2 billion (in 2024- 25 prices), for mid-2039 completion of construction. The extra time it took negotiations for the deal to be completed, between the government and EDF and investors, allowed “for a fully developed and costed timetable” to be generated, comments NAO. The deal was signed in 2025. What benefits arise to consumers from this arrangement? That argument rests in the field of pursuing net zero benefits. Basically, Sizewell C is cheaper than alternatives, to be ultimately reflected in bill savings, way down the line. NAO says that the department’s modelling of benefits shows they will not outweigh costs to consumers until after 2060. “They are also subject to significant uncertainty,” adds


NAO, including what if other forms of net zero technology become the cheaper way to achieve the goals?


THIS NOVEL APPROACH HAS COSTS AND RELIES ON BIG ASSUMPTIONS. - NAO, ON SIZEWELL C.


Even though approaching par is far down the line, to


avoid the baseline being even higher at the outset the government - while providing “most of the finance”, says NAO - only has a minority share of the project company. That is debt funding split to be up to £36.6 billion from government and £5 billion from commercial lenders; and, up to £3.8 billion of equity funding from government, for a 44.9% stake of the project company. This is deliberate. Why? Basically, government views itself as bringing red tape costs to the effort and has caused “governance weaknesses” to state mega projects in the past. Not helpful and so best to keep back. Give debt


funding instead and encourage private investor involvement to help, so as to help reduce construction costs and speed delivery, it is further argued. That has echoes of the case pitched by governments over decades and which has not always worked out with private sector excellence. The case here, though, is that government is relatively worse, in general, so best not to have it involved in delivery. Except for funding. And, what government can do - to set rules to get consumers to pay. Part of what the NAP calls the “novel model”. The model appears to have an interesting dimension.


NAO says financial returns to investors will cost £4.0 billion to £4.5 billion “unless they also help to cut costs and decrease delivery time by a commensurate amount.” That would seem to suggest there could be good publicity for the construction industry and investors in the chance to show savings through great ability? Possibly. As NAO reflects, “It is not clear how strongly the


deal incentivises investors in Sizewell C to reduce construction costs.” NAO adds that “there are limits on how much investors can gain or lose as part of the deal”.


The government’s own cost estimates are in a range


of a ‘lower threshold’ of £40.5 billion, for basically finishing in the same year, up to the ‘upper threshold’ of £47.7 billion for a finish four years later, in 2043. The NAO notes there is a pain/gain share mechanism between investors and consumers, but also that government and investors have committed to funding the project up to the ‘upper threshold’.


CHANGES AHEAD? The reports and recommendations come as, of course, the UK Government once more appears to be entering a period of flux, with a leadership change, yet again, within the ruling party and potential re-directions of strategy, policy, agendas and budgets. It may well be, then, that major infrastructure once more finds itself pulled along by the draught from the juggernaut of change. What is wanted, and why and how, may shift and so affect what has been recently planned or e-planned, or still being proposed. Perhaps even bigger changes could result? It may be that there is desire from the politicians


taking their turn next that there should, indeed must, be more transport and other infrastructure, and involving underground works. Maybe even the resurrection of a few formerly sought new-build projects, or overdue improvements. No way to know, for the moment. Only to know what has been said about most - not


all - major infrastructure projects, no matter who is leading the government: improve overall delivery, concerning time and budget. Another tipping point in politics is coming for the nation,


with associated uncertainty, in the short-term. What is for sure, though, is that whatever is decided on the infrastructure agenda there will - or should be further focus on how early decisions are made in the development of major infrastructure projects. Under the spotlight will be considerations of the effectiveness of thinking on project timelines and budgets, and the strategies for scoping and procurement, and then control of delivery. So much is achieved, and notably well, in the detailed


engineering of projects, and ever increasingly so in tunnelling. But how the major projects, as colossal and complex endeavours, come to be organised can at times undermine the technical efforts and achievements, despite plaudits. What to take from this? A common message, perhaps, that has come up repeatedly, for years: do not rush into decisions and to get onto site, especially for biggest of construction projects. What’s to be done, then? Talk? There are always


sites to prepare for, and it could be that overlapping projects - which are ever present - could each see more of earlier and calmer engagement with the supply chains - designers of course, but contractors too. That would suggest a supply chain alignment would be helpful, perhaps. But such would not happen unless doors are open, there would be ways to engage and pay. For such an approach would need the project owners and operators - the ultimate clients - to get themselves focused more and so engage differently, earlier and much more fully, and continuously.


July 2026 | 33


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