£60 million savings on new Hinkley Point C grid link

Publication date
22nd May 2020
Information type
Policy area

Energy regulator Ofgem has confirmed its decision to cut the proposed cost of the Hinkley-Seabank project by £60m, saving consumers money on their bills.

The link, which is due to be completed in 2024, will connect the new Hinkley Point C nuclear power station to the grid.

In October Ofgem set out the areas it deemed National Grid Electricity Transmission (NGET) costs to be too high.

NGET wanted to spend £716m on the new link, but Ofgem’s decision today cuts that to £656m. Ofgem has determined this to be the efficient cost for delivering the project following consultation and analysis. The cost will be spread over the next 45 years.

Ofgem’s minded-to position in October proposed to cut costs to the project by £80m. However, following consultation and analysis of new evidence, Ofgem is satisfied that some of these costs are appropriate and provide value for money. These include:

  • £11.3 million of development costs in relation to the project’s T-pylons
  • £5.8 million of additional costs in relation to project contingency, and
  • £1.6 million of additional costs in relation to project management. (1)

NGET’s rate of return for delivery of the project will be set in line with Ofgem’s tough next round of price controls, RIIO-2, which are expected to be finalised later this year.

Ofgem has confirmed and published its decision to fund the project through the RIIO price control arrangements rather than through the Competition Proxy Model. Ofgem’s analysis shows that this presents best value to bill payers.

When compared to RIIO-1, the updated RIIO-2 framework is projected to save billions of pounds for consumers over its five year period.

Notes to editors

  1. NGET originally requested a total of £51.8m for project management costs. This should have been  £50.7m. This has been corrected and explained in the decision document.
  2. Most of this investment in this project be covered by RIIO2, the next network price control that takes effect from March 2021 to 2026 for electricity transmission, and will deliver lower rates of return of investors, lower capital costs and significant savings for consumers.
  3. Ofgem proposes to cut costs of new Hinkley Point grid link.
  4. Decision on our project assessment for the Hinkley-Seabank electricity transmission project.
  5. Hinkley - Seabank: Updated decision on delivery model.

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