Wednesday, 16 May 2018

Unearthed/Zach Boren: Q&A: What’s happening with UK’s new nuclear power projects?

Unearthed
Q&A: What’s happening with UK’s new nuclear power projects?

Theresa May reportedly met with the president of Hitachi about providing UK state support for the Wylfa project
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Zach Boren
@zdboren

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Credit: Horizon nuclear power

Last time the UK finalised plans for a new nuclear power station, things got hairy.

The drama surrounding Hinkley Point C spanned everything from technical issues with the reactor and the financial terms of the agreement to the involvement of the Chinese state and Brexit.

It may still be early days for the next new nuclear power project in the pipeline, but so far Wylfa is shaping up to be pretty controversial in its own right.

So there’s another nuclear power plant in the works?

A few actually.

First up there’s Moorside, planned near the existing Sellafield site in Cumbria. It was due to be built by the Toshiba-Engie joint venture Nugen, but the project fell apart last year. First Engie made an exit in April and then there was the near-complete collapse of Toshiba’s business, a disaster blamed on the company’s poorly performing nuclear arm Westinghouse.

Moorside looks set to be rescued by Korean company Kepco, but it will likely be delivered years later than its planned 2025 start date since Kepco’s reactor design hasn’t yet been cleared by UK authorities.

Further down the line there are the two new nuclear projects that are part of the Hinkley package. As per that agreement, EDF is set to build reactors at Sizewell in Suffolk while Chinese firm CGN will lead at the Bradwell site in Essex.

Last month EDF’s boss Simone Rossi told The Times that “maybe [Sizewell] is not feasible” and said the company could walk away unless it gets a generous funding deal from the government. Meanwhile controversy over China’s involvement in Bradwell echoes the same tensions that nearly derailed Hinkley in the first place.

But the one everyone’s talking about right now is Hitachi’s Wylfa project, planned for the island of Anglesey in Wales.

Why are they talking about that?

Because Hitachi is looking for significant support from the British government, from loan guarantees all the way down to a direct government stake. With construction costs on the project ballooning, they were reportedly spooked by what happened to Toshiba.

Instead of the sky-high strike price (the amount for which they sell power) that Hinkley got, one that will sit on consumer energy bills for decades to come, Hitachi wants the taxpayer to alleviate risk from building the project by underwriting up to £20 billion worth of loans.

There have even been reports that Hitachi is demanding that the government  take a direct stake in the project and stump up a third of its costs — the firm has reportedly threatened ditch the deal if that doesn’t happen.

If it goes forward, that arrangement could mean the entire cost of the project “lands on the government’s balance sheet” even if it only takes a minority stake, according to the Sunday Times.

Hitachi is so serious about this that the company’s president reportedly came to London the other week to hash it out with Theresa May. (though Downing Street won’t confirm)

Did May agree to fund the project?

Most of what we read about Hitachi, Wylfa and the prospect of government support we read in the Japanese press.

And the picture we’re getting from the Nikkei news service is unclear at this point. One day we’re reading about a direct government stake in the project, the next we’re hearing May has agreed to £18 billion in loan guarantees.

The British government, for what it’s worth, is ‘playing down’ the media reports. And we’re still awaiting news about a possible urgent debate on the matter in parliament.

In short: We don’t know

So what *do* we know?

The British government is betting big on new nuclear which is leading to brinkmanship with the companies it’s dealing with, Hitachi in particular.

But whilst the UK side is staying tight-lipped on the prospect of a deal, perhaps mindful of setting a precedent, the Japanese firm is basically airing its aims in the local media — so best to take all that with a pinch of salt.

Or as The Times put it:
More explainers

    Q&A: What’s the deal with the UK selling its Green Investment Bank?
    Q&A: What’s the UK government doing to solar power?
    Q&A: How much are billpayers paying for Hinkley and who gets the benefit?

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