Plans for a new nuclear power station at Wylfa on the Welsh island of Anglesey have taken an important step forward after Britain’s nuclear regulator approved the Japanese reactor technology to be used at the site after a four-year review. Yet, the clearing of one obstacle last week has only sharpened focus on a bigger one ahead: the need to secure billions of pounds of finance to build the plant. The Wylfa site, owned by Horizon, a subsidiary of Hitachi, the Japanese conglomerate, has become a crucial test of UK energy policy because it is the farthest advanced of several proposed nuclear projects vying for government backing. The fate of Britain’s ambitious reactor-building programme is being watched closely after a year in which the falling cost of renewable power coupled with further delays and cost overruns on nuclear projects in the US, France and Finland has deepened doubts about the economics of atomic power. Duncan Hawthorne, chief executive of Horizon, says a consensus is forming across government and industry that the Hinkley financing model, which involved EDF and its Chinese partner CGN covering the entire cost of construction, will not be repeated. Constructive talks are under way with the Treasury and the business department, he adds, about alternative funding structures. He declines to provide further details, but options are thought to include the possibility of the UK and Japanese governments injecting equity or using their financial muscle to help lower debt financing costs. Mr Hawthorne says Treasury officials are “fully engaged” with Horizon and “committed to finding a solution” that will allow Wylfa to be built at a lower cost than Hinkley. But he warns that Hitachi, having so far invested about £2bn before a shovel has been placed in the ground, needs to see firm progress in 2018 if it is keep burning cash.
FT 19th Dec 2017 read more »