Hitachi has confirmed it is walking away from a proposed new nuclear power plant in the U.K., raising serious questions about government plans to fund new nuclear projects.
Speculation began earlier this week but has finally been confirmed by Hitachi on Wednesday.
The Wylfa Newydd project in Wales was put on pause by Hitachi in January 2019 after its subsidiary, Horizon Nuclear Power, said it could not secure financing. The company was also eyeing a site in Oldbury in England. The projects had a combined capacity of 5.8 gigawatts.
Now that pause on Wyfla is permanent.
The U.K. has 9GW of nuclear power capacity, most of which will be retired in the early 2030s. EDF is currently building Hinkley Point C, which will add another 3.2GW in the middle of this decade. It has a contract for difference (CFD) at a strike price of £92.50 per megawatt-hour ($121.90) for 35 years.
EDF’s Sizewell C is also waiting confirmation over a possible new funding model, with a new CFD off the table. There is currently no government-backed route to market for new nuclear plants in the absence of any nuclear CFD. Entirely private financing attempts have stalled leaving the government’s proposal to add a levy to consumer bills the only game in town.
Wyfla had already entered the national infrastructure planning process. Wylfa’s application deadline was the end of this month. The Oldbury development was less mature.
“Nuclear power has a critical role to play in helping tackle our energy needs, meeting our climate change targets and levelling up the economy through green growth and job creation,” said Horizon’s chief executive Duncan Hawthorne in a statement confirming the news.
“Wylfa Newydd on Anglesey and Oldbury on Severn are highly desirable sites for new nuclear build. We will do our utmost to facilitate the prospects for development which will bring the major local, national and environmental benefits that nuclear can uniquely deliver as we push to transition to a net-zero carbon economy by 2050,” he added, suggesting that a new developer could takeover the site and pick up where Horizon has left off.
No clarity on future funding plans
In August this year, Horizon stated publicly that it could ramp up progress on Wylfa very quickly if required. Hawthorne told the Financial Times: “We are ready to go…but the funding model needs to be in place. We’ve got a competitively priced project that will generate jobs quickly and really fuel the economy in the region the plant is in.”
Horizon had set its hopes on a U.K. government consultation process to consider a regulated asset base (RAB) model to fund new nuclear power plants through consumer power bills. A (highly-regulated) levy would be handed to developers, including during the construction phase, which helps keep the cost of financing down. It’s a model used for other infrastructure markets, including London’s £5 billion “super sewer” tunnel. Critics argue it can leave consumers on the hook for the construction risk.
The RAB consultation closed in October 2019. In May the U.K’s Department for Business, Energy and Industrial Strategy (BEIS) told GTM the results of the consultation would be published in due course. There is still no progress four months later. It appears that BEIS had no update for Horizon in August that was sufficient to persuade them to maintain their interest in new-build nuclear in the U.K.
Emma Pinchbeck, CEO of trade body Energy U.K., noted that most credible advice on the country’s route to hitting its 2050 net-zero target includes nuclear power. That includes projections by the Committee on Climate Change, the government’s official climate advisors.
“We would welcome further clarity from government on its nuclear strategy, including a decision on a funding model for new nuclear in the UK,” she said in a statement.
BEIS has been approached for comment.
The China General Nuclear Corporation, CGN, owns 33.5 percent of Hinkley Point C and 20 percent of Sizewell C, a proposed carbon-copy of the new Hinkley plant. It also has the majority stake in the Bradwell B project, which it has ambitions to build itself, rather than merely acting as an investor.
Further potential investment from Chinese state-owned companies has drawn the ire of politicians including a former Conservative Party leader Iain Duncan-Smith, warning against the wisdom of China’s dominance in new nuclear in the U.K.
If BEIS is not comfortable with the RAB, the last obvious funding option would be for the government to fund the construction itself, rather than outsourcing it to French and Chinese state-owned companies.
Source: Greentech Media