British Households to Fund £2bn Annual Nuclear Subsidies
UK energy bill payers are set to contribute approximately £2 billion per year in subsidies to French state-owned energy giant EDF, according to recent government disclosures. This substantial financial commitment will support the construction and operation of two major nuclear power stations: Hinkley Point C in Somerset and Sizewell C in Suffolk.
The Hinkley Point C Agreement
EDF will receive £1 billion in annual payments once Hinkley Point C becomes operational, currently scheduled for 2030. This arrangement operates under the government's contracts for difference (CfD) system, which guarantees low-carbon energy producers a fixed price for their electricity output.
The original agreement, established in 2013 under the Conservative-Liberal Democrat coalition government, set a "strike price" of £92.50 per megawatt hour. Accounting for inflation, this price has now risen to approximately £133 and is projected to reach £150 by 2030.
Sizewell C Funding Mechanism
Separately, another £1 billion annually will be added to energy bills through a specific nuclear levy designed to fund Sizewell C. Starting in January, this levy will initially add £10 per year to household energy bills, with projections indicating this amount will double by 2030 to support the plant's construction.
The total projected cost for Sizewell C has reached an estimated £100 billion, though historical precedent suggests this figure could increase. Hinkley Point C's original £18 billion budget has ballooned to £46 billion following multiple delays and cost overruns.
Government Perspective and Energy Security
A government spokesperson defended the substantial investment, stating: "We are reversing a legacy of no new nuclear power being delivered to unlock a golden age of nuclear, securing thousands of good, skilled jobs and billions in investment."
Officials argue that the stable "baseload" output from nuclear reactors could ultimately offset costs by reducing the expense of balancing volatile renewable energy sources like solar and wind. The Nuclear Industry Association estimates these balancing costs will reach approximately £2 billion this year alone.
Consumer Impact and Political Context
The combined output from both nuclear plants will generate about one-sixth of Britain's peak electricity demand, equivalent to powering six million homes. Despite the substantial consumer funding, government sources highlight that if Hinkley Point C had been operational during the energy price spike following Russia's invasion of Ukraine, it could have saved energy users more than £4 billion.
Chancellor Rachel Reeves has simultaneously promised to reduce average household energy bills by £150 from next April by cutting green levies, creating a complex financial picture for UK energy consumers.
The Office for Budget Responsibility confirmed these subsidy arrangements in recently released documents, noting that CfDs are expected to generate £4.6 billion in government receipts in 2030-31, including the £1 billion allocated to Hinkley Point C during its first operational year.
