French energy supplier EDF has estimated that the cost of completing the new Hinkley Point nuclear plant will be nearly 10% more than expected.
The company, which is the project’s main backer, said the total cost of the power station was likely to rise by £1.5bn to £19.6bn.
Hinkley Point C would be the UK’s first new nuclear plant for decades, but has been beset with budget problems.
An EDF review found the project could also be delayed by up to 15 months.
However, the firm said it still hoped to finish the first nuclear reactor by the end of 2025 as planned.
The extra costs partly result from adapting the project’s design to meet the demands of UK regulators, the company said.
Climate campaigners said Hinkley Point was “over time and over budget” only nine months since being approved.
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EDF is building two new reactors at Hinkley Point, which are expected to provide 7% of the country’s electricity needs for 60 years.
France’s state-controlled energy firm is funding two-thirds of the project, with China investing the rest.
A government spokeswoman said “the cost of construction, including any overruns, sits with the contractor”.
“Consumers won’t pay a penny until Hinkley is built; it will provide clean, reliable electricity powering six million homes,” she said.
Work is underway on the project, which is expected to create more than 25,000 jobs, after Prime Minister Theresa May formally gave it the go-ahead in September last year.
EDF said it remained on track to meet the first major milestone in 2019 but that delays could come later in the project.
Critics of the deal have warned of escalating costs and the implications of allowing nuclear power plants to be built in the UK by foreign governments.
John Sauven, executive director at Greenpeace UK, said: “Hinkley is already over time and over budget after just a few months of building work.
“Today’s news is yet another damning indictment of the government’s agreement to go ahead with this project.”
Last month, public auditors called the new nuclear plant “risky and expensive”.
The National Audit Office said the government had “increasingly emphasised Hinkley Point C’s unquantified strategic benefits, but it has little control over these and no plan yet in place to realise them”.