ENERGY giant EDF has hit back at speculation that the cost of the Hinkley C project is set to rise by £3 billion to £21 billion.

Following a meeting earlier this month EDF and Chinese partners CGN had committed an extra £2.7 billion 'if necessary' in 'extreme scenarios' to the new nuclear power plant in Somerset, The Telegraph reported.

However EDF have released a statement reiterating that this money is not expected to be used.

"The cost of the project is £18bn in nominal terms. We have stated this in public many times and this has not changed," an EDF spokesman said.

"This £18bn includes and has always included a provision for risks and contingencies. If we deliver the project for less, the gain will be shared with customers as part of the CFD gain share mechanism. Customers would not bear the cost of any overruns.

"The total equity the two shareholders are committed to provide if necessary includes 15% of additional capacity amounting to £2.7bn.

EDF say this reflects normal, prudent good practice for any construction project to know that the money would be available in the case of more extreme scenarios.

"We don’t expect to use the additional 15% because we expect that Hinkley Point C will be on time and on budget at £18bn," the EDF spokesman added.

Further speculation over the future of the project came after David Howell told the House of Lords that the Chinese have a 'plan B to bypass' EDF altogether, however EDF have said rumours about the Chinese bidding to build at Hinkley Point C are 'entirely false'.

French Energy Minister Segolene Royal told the Financial Times she was worried about the impact the project would have on the state-owned company's balance sheet.

Hinkley C is expected to provide 25,000 jobs during the construction phase and will cater for seven per cent of the nation's energy supply, with EDF saying it will be operational by 2025.

However the concerns over the project have led Moody's Investors Service to downgrade EDF's credit rating from A1 to A2, saying the negative outlook is due to '"the incremental risks associated with the Hinkley Point C (HPC) nuclear power station project in the UK."

The long-awaited Final Investment Decision for the project is now expected to be made in September.