Question to the Department for Energy Security & Net Zero:

To ask the Secretary of State for Energy Security and Net Zero, with reference to the first bullet point on page 23 of EDF Energy Holdings Limited Annual Report and Financial Statements 31 December 2023, what estimate he has made of the amount of compensation that will be paid from Sizewell C to Hinkley Point C; and how that cost will be allocated between (a) private investors, (b) the UK Government and (c) electricity consumers.

Under the terms of a contractual agreement between HPC and SZC, which was agreed at the time of the Final Investment Decision on HPC, a payment is payable from SZC to HPC if SZC takes a positive FID. This payment reflects benefits for SZC, including the significant learning and ‘avoided First-of-a-Kind’ costs that SZC will gain from being a ‘second-of-a-kind’ replica of HPC.

The payment would be financed by the investors in SZC and would be added to the cost base of SZC, and is therefore included in the Government’s Value for Money assessment of the SZC project.

The value of the payment to HPC is intended to be broadly equal to £3/MWh in Net Present Value terms, reflecting the size of the reduction in the strike price at HPC if a positive FID on SZC is taken.

Taking into account the lower HPC strike price, the overall effect of the payment on GB electricity consumers would be broadly neutral.