Wylfa and Olbury on hold as Hitachi suspends all United Kingdom nuclear work

Wylfa and Olbury on hold as Hitachi suspends all United Kingdom nuclear work

Hitachi said Thursday it would freeze construction of its stalled nuclear power station in Wales due to financing problems, a blow to Britain's nuclear strategy and a costly decision for the Japanese firm.

Given the financing challenges facing new nuclear projects, I made clear to the House in June that we would be considering a new approach to supporting Wylfa that included the potential for significant direct investment from the government.

Work on a major new nuclear power station in Britain was suspended after the developer, Japan's Hitachi, said Thursday it had been unable to agree on financing with the United Kingdom government.

The British government had reportedly agreed to finance two thirds of the construction cost, with Hitachi as well as Japanese and British investors scheduled to cover the balance.

"This has made the challenge of attracting private finance into projects more hard than ever, with investors favouring other technologies that are less capital-intensive upfront, quicker to build, and less exposed to cost overruns", Clark said.

"As a result we will be suspending the development of the Wylfa Newydd project, as well as work related to Oldbury, until a solution can be found".

With the clock ticking down to March 29, the date set in law for Brexit, the United Kingdom is now in the deepest political crisis in half a century as it grapples with how, or even whether, to exit the European project it joined in 1973. "The government is committed to the nuclear sector", the spokesman said.

China General Nuclear Power Corporation (CGN) has a 20 percent stake in Sizewell C, while EDF has a 33.5 percent stake in CGN's project to build a reactor at Bradwell, Essex.

Britain wants new nuclear plants to help replace its ageing fleet of nuclear and coal plants coming offline in the 2020s, but high up-front costs have deterred construction.

It also comes just two months after another Japanese company, Toshiba, made a decision to not go ahead with a power station it was looking to build in Britain.

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Hitachi stopped short of scrapping the Anglesey project in northern Wales.

"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, the chief executive of Hitachi subsidiary of Horizon Nuclear Power.

The nuclear writedown wipes off the Horizon unit's asset value, which stood at 296 billion yen as of September-end.

Horizon Nuclear Power said it could resume development at Anglesey in the future.

Horizon is developing the Wylfa Newydd nuclear plant on Anglesey in North Wales and has a second site at Oldbury on Severn in South Gloucestershire.

However, analysts and investors viewed the suspension as an effective withdrawal and saw the decision as a positive step that has removed uncertainties for the Japanese conglomerate.

The company will book a loss of about 300 billion yen ($2.8 billion) after suspending indefinitely plans to build reactors in the United Kingdom and writing down the value of its British nuclear business, according to a statement.

Rumours had been swirling for some time that Hitachi was planning to pull back from its United Kingdom nuclear commitments, with numerous reports emerging in Japanese press over the last few months detailing the company's trouble in finding project finance.

Mitsubishi Heavy Industries Ltd has effectively abandoned its Sinop nuclear project in Turkey, a person involved in the project previously said, as cost estimates had almost doubled to around 5 trillion yen.

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