Published: Sun, January 20, 2019
Sci-tech | By April Francis

Work on United Kingdom nuclear power plant halted over financing impasse

Work on United Kingdom nuclear power plant halted over financing impasse

Announcing the decision today, Duncan Hawthorne, CEO of Horizon Nuclear Power, a subsidiary of Hitachi, said: "We have made very strong progress on all aspects of the project's development, including the United Kingdom design of our tried and tested reactor, supply chain development and especially the building of a very capable organisation of talented and committed people".

Given the financing challenges facing new nuclear projects, I made clear to the House in June that we would be considering a new approach to supporting Wylfa that included the potential for significant direct investment from the government.

Britain is committed to the nuclear power sector, Prime Minister Theresa May's spokesman said on Thursday, after Japan's Hitachi Ltd 6501.T froze a 3 trillion yen ($28 billion) nuclear power project in Wales. The project would be financed one-third by equity and rest by debt.

Work on a major new nuclear power station in Britain was suspended after the contracted developer, Japan's Hitachi, said Thursday that it has been unable to agree on financing with the United Kingdom government.

With the clock ticking down to March 29, the date set in law for Brexit, the United Kingdom is now in the deepest political crisis in half a century as it grapples with how, or even whether, to exit the European project it joined in 1973.

The withdrawal of the Japanese conglomerate could leave the nuclear newbuild industry open to Russian and Chinese state-owned companies as Western private firms struggle to compete.

China General Nuclear Power Corporation (CGN) has a 20 percent stake in Sizewell C, while EDF has a 33.5 percent stake in CGN's project to build a reactor at Bradwell, Essex.

"Despite extensive negotiations and hard work by all sides, the government and Hitachi are unable to reach agreement to proceed at this stage".

Announcing suspension of the project, the Tokyo-headquartered company said today: "Since the acquisition of Horizon Nuclear Power, Hitachi has set the following three points as the main criteria for business continuation and reviewed the Horizon project from the viewpoint of its economic rationality: securing reasonable returns as a private enterprise; realising a financial structure on the premise of making the Horizon project off balance sheet; limiting an investment amount to an acceptable range as a private enterprise".

Britain wants new nuclear plants to help replace its ageing fleet of nuclear and coal plants coming offline in the 2020s, but high up-front costs have deterred construction.

The Japanese company bought into the project when it paid £697m to two German power companies in 2012. This week Hitachi, another Japanese electronics giant, scrapped a plan to build a power station on Anglesey.

The nuclear writedown wipes off the Horizon unit's asset value, which stood at 296 billion yen as of September-end. In the meantime we will take steps to reduce our presence but keep the option to resume development in future.

Workers unions have expressed concerns that the cancellation of the plant - which would have provided around 6 per cent of United Kingdom electricity - might imperil around 300 jobs at Hitachi's United Kingdom subsidiary, Horizon Nuclear Power, and preclude the creation of thousands more.

Japan's Hitachi Ltd 6501.T confirmed on Thursday it had frozen plans for a plant in Wales, while Toshiba Corp 6502.T scrapped its British NuGen project a year ago.

Addressing the effects that this decision will have, Mr Hawthorne said: "Clearly this will have a significant impact for all involved with our project".

Like this: