Hitachi Will Write Off $2.8B in Halted U.K. Nuclear Work
Competing with ever cheaper renewable energy schemes, Japan’s Hitachi Ltd. has suspended work on its U.K. nuclear power program after failing to strike a financial deal with the government.
Hitachi’s wholly owned project company Horizon Nuclear Power will mothball work on two Advanced Boiling Water Reactor plants totaling 5,800 MW at Wylfa Newydd, North Wales, and Oldbury-on-Severn, South Gloucestershire, England. The Welsh project was estimated to cost about $20 billion.
“I am very sorry to say that despite the best efforts of everyone involved we’ve not been able to reach an agreement to the satisfaction of all concerned,” said Duncan Hawthorne, Horizon CEO. “We remain committed to keeping channels of communication open with the government and our other key stakeholders.”
During negotiations, the government offered to take a third equity stake in addition to the investment by Hitachi and Japan, reported the U.K. government’s Business and Energy Secretary Greg Clark.
It also offered to provide all required debt to complete construction and to secure a strike price for energy generated of $96.8 per megawatt hour, which was 19% less than the figure agreed for the Hinkley Point C nuclear plant three years ago.
Regulatory and other pressures have been pushing up the global cost of nuclear power, making private projects less bankable, according to Clark.
Meanwhile, the cost of renewables such as offshore wind, has fallen to a point where the clean energy now "requires very little public subsidy and will soon require none,” he added. “Renewable energy may now not just be cheap, but also readily available.”
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Hitachi paid $900 million for Horizon from previous owners in 2012.
It set about negotiating a deal that would keep the development off its balance sheet, limit its total investment and secure a suitable profit.
Having failed in that mission, the company will write off its $2.8 billion in U.K. nuclear costs in this financial year.
