Britain’s plan for a nuclear revival was thrown into disarray after the second Japanese company in as many months seemed to pull the plug on a new plant.
The UK government has put atomic energy at the heart of its effort to attract 100 billion pounds ($130 billion) of investment to upgrade its aging reactors it needs to keep the lights on. The technology has been seen as a key part in the future power mix, complementing the rising share of renewable energy.
Japanese conglomerate Hitachi Ltd will halt work on the Wylfa project and take a one-time charge as negotiations with the British government over funding stalled, the Nikkei newspaper reported.
After Toshiba Corp’s withdrawal from its Moorside plant in Nov-ember, it leaves the nation with just Electricite de France SA’s Hinkley Point project underway and that’s been mired in controversy because of delays and the cost to the UK consumer.
“With all new nuclear builds it’s very expensive,” Deepa Venkates-waran, an analyst at Sanford C Bernstein Ltd in London, said by phone. “The UK has come under criticism for the high strike price it struck with EDF and there’s a lot of pressure” to get costs lower and Hitachi probably could not achieve the financial support it needed, she said.
Nuclear power has been a mainstay of the British energy mix for decades. But for that to remain, EDF’s fleet of eight plants would need to be replaced with a new generation of stations.
While some European nations, including Germany, decided to exit the technology after the Fukushima disaster in 2011, the UK pushed ahead with plans for new reactors. Nuclear is seen as a more climate friendly alternative to the coal stations that will be completely phased out by the middle of the next decade.
“The UK politicians will still press ahead with nuclear and thus will now have to offer more attractive conditions to the developers to make sure we build enough atomic capacity to replace aging reactors in a timely manner,” said Elchin Mammadov, a utility analyst at Bloomberg Intelligence in London.
Before the Nikkei report that Hitachi was pulling out, Japanese Prime Minister Shinzo Abe said the project was of “strategic importance” for both nations but it wasn’t discussed when he met his UK counterpart Theresa May in London. May said at a joint press conference that it would be “a commercial decision” for Hitachi.