A full blown crisis for the UK energy’s strategy was triggered after the project to build a nuclear power station in Wales was exited by Hitachi. This Japanese company was the second company to quit major nuclear projects in two months.
After Hinkley Point C, the next in a line of new nuclear plants in the UK was the £16bn Wylfa plant on Anglesey. But it was not possible for the Japanese firm to arrive at an agreement with the British government.
Hitachi said that the decision of scrapping the project, which was taken by the company board on Thursday, would cost the company a hit of 300bn yen.
This decision by the Japanese conglomerate dealt a serious blow to the energy policy of the UK government and its hopes of attracting more investment in the country after Brexit.
There was displeasure among the employee unions because of Hitachi’s decision because it would render about 300 employees jobless at the company’s UK subsidiary, Horizon Nuclear Power as well as about a thousand jobs in the supply chain of the plant. The decision also cancelled the potential thousands of construction jobs for the actual plant.
A second Hitachi plant at Oldbury in Gloucestershire will be shelved too.
An agreement between London and Tokyo was not possible after negotiations and therefore the company was pulling out of Wylfa and Oldbury, said Duncan Hawthorne, CEO of Horizon Nuclear Power.
“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.”
There is a lot for the UK government to do in the late 2020s and early 2030s following the cancellation of the power stations and the Moorside project which was also exited by Toshiba in November. About 15 per cent of the total electricity demand would have been supplied by the three plants combined.
The government had offered the company a “generous and significant” package of support, said Business secretary Greg Clark. The offered support included ensuring a debt facility for the project, accepting liabilities for one third stake of the project and guaranteeing a price of up to £75 per megawatt hour of power for 35 years.
While higher compared to the price offered to some windfarms in the early 2020s of £57.50, the price offered to Hitachi was much lower than the £92.50 that had been awarded to EDF Energy for Hinkley Point C. It is expected that the £57.50 would drop further when auctions are held by the government later this year.
While the costs and prices for nuclear power had become higher due to safety measures attached, the costs and prices of renewable sources of energy have been getting cheaper in the last five years, Clark told MPs. “The challenge of financing new nuclear is one of falling costs and greater abundance of alternative technologies, so that it is being outcompeted,” he said.
(Adapted from TheGuardian.com)