The board of Japanese conglomerate Hitachi will next week "suspend all work" on the long-planned Wylfa nuclear power plant in Wales after talks with the UK failed to secure more government funds for the scheme, a leading business daily in Japan reports today.
If it comes to pass as reported, the decision will signal the end of Japan’s bid to export its civil nuclear expertise, and cast doubt on the UK’s plan to build a fleet of new nuclear power stations.
The two sides spent the past year negotiating the financials of the project, including the terms for its funding and the price to be paid for the completed plant’s electricity. Now it seems they have reached an impasse, and Hitachi will walk away.
The Nikkei Asian Review reports today that Hitachi will say next week that all pre-construction work will be halted, and the $2.8bn in assets held by Horizon, its British nuclear business, will be frozen.
Hitachi will book a similar-sized loss for the fiscal year ending in March, the Review said.
Horizon was originally a joint venture between two German utilities, E.ON and RWE. Hitachi acquired complete ownership of it in 2012 for $800m as part of its plan to expand into foreign markets. It has spent about $1.8bn since 2015 on preparing the Wylfa site.
But Hitachi was concerned that the construction cost of the plant, which had been put at almost $30bn, was too great a risk for it to shoulder, and it wanted to sell half its stake to other companies. It has since struggled to do so.
Talks between Hiroaki Nakanishi, the chairman of Hitachi, and Prime Minister Theresa May led to an agreement whereby the UK government would arrange $18.5bn in financing. However, the lack of appetite for nuclear investments among Japanese corporations such as Tokyo Electric Power Co meant that Hitachi was unable to raise the balance.
If Hitachi does call a halt to Wylfa, it will also end Japan’s plans to export its nuclear expertise. Last month a consortium that included Mitsubishi Heavy Industries scrapped the Sinop nuclear project in Turkey after its costs rose from an initial estimate of $22bn to $40bn.
The Wylfa scheme was to have two advanced boiling water reactors with a total installed capacity of 3GW on the site of a decommissioned Magnox facility. If it is called off, it will also call into question the UK’s plan to commission a fleet of third-generation reactors to replace the country’s coal and gas-fired plants.
Image: Horizon Nuclear Power’s rendering of the Wylfa site