Cost estimates for nuclear power in the UK

Current UK Government support for nuclear power has in part been informed by cost estimates that suggest that electricity from new nuclear power stations will be competitive with alternative low carbon generation options. The evidence and analysis presented in this paper suggests that the capital cost estimates for nuclear power that are being used to inform these projections rely on costs escalating over the pre-construction and construction phase of the new build programme at a level significantly below those that have been experienced by past US and European programmes. This paper applies observed construction time and cost escalation rates to the published estimates of capital costs for new nuclear plant in the UK and calculates the potential impact on levelised cost per unit of electricity produced. The results suggest that levelised cost may turn out to be significantly higher than expected which in turn has important implications for policy, both in general terms of the potential costs to consumers and more specifically for negotiations around the level of policy support and contractual arrangements offered to individual projects through the proposed contract for difference strike price.