French energy giant EDF has revealed that its nuclear power plant project in Somerset is now set to come it at around £2.9bn over budget.
The Hinkley Point C power plant is now due to cost somewhere between £21.5bn and £22bn.
EDF had previously raised its estimate for the project by £1.5bn back in 2017.
The French energy company blamed “challenging ground conditions” for the raised estimate on the plant being built in Somerset.
EDF have also revealed that there is an increased risk of the project being 15 months on top of it going over budget. Despite still aiming to have the project finished by 2025, there is a higher chance that it will not be completed until 2026.
In a statement, EDF said: "Cost increases reflect challenging ground conditions which made earthworks more expensive than anticipated, revised action plan targets and extra costs needed to implement the completed functional design, which has been adapted for a first-of-a-kind application in the UK context”.
Customers and the taxpayer will not be out of pocket in spite of the increasing costs. Due to the structure of the funding behind the project, EDF and its partner - China General Nuclear Power Corp (CGN) - are liable for the extra costs.
The companies do, however, have a buffer to absorb the costs as a comparatively high fixed price for electricity had already been agreed to beforehand. The higher price was tag was lodged in order to provide such leeway for increased costs of construction, as well as to make prices more predictable for consumers.
Martin Young, an analyst with Investec, said: "This is clearly bad news for nuclear new build prospects in the UK, particularly in light of recent record low offshore wind prices”.
Last week, wind power prices were set at significantly lower prices than those expected from Hinkley Point C. Prices for wind power to be delivered by 2025 were set at as low as £40 per megawatt hour. Nuclear power from Hinkley Point C is set to cost around £92.50 per megawatt hour.
EDF's director of corporate and regulatory affairs, Paul Spence, told the Today programme."We've given the best view we can, given what we know. I can't say today what will happen over the course of the construction."
The power plant is over budget in common with the other major building works taking place in the UK such as crossrail and HS2.
Earlier this month, Transport Minister Grant Shapps said that there would be a five year delay for the first phase of the HS2 railway between London and Birmingham, with the cost not having risen from £62bn to between £81bn and £88bn.
The railway going through London from Reading to Shenfield, Crossrail, was due to be in operation by December. Despite initially being expected to cost £14.8bn in 2010, the revised cost has been put at £17.6bn with the likelihood of it rising even further according to a government report.
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