Hitachi has suspended plans to build £16bn nuclear plant in Wales due to concerns over the rising cost of the project.
Hitachi had been in talks with the UK government since June but the two parties were unable to come to an agreement. The decision to halt the project was described as a “significant blow” to the UK’s future energy plans by the Confederation of British Industry. The withdrawal is estimated by Hitachi to leave them around 300bn yen (£2.14bn) worse off in what they described as “extraordinary losses”.
“Despite the best efforts of everyone involved the parties have not been able to reach an agreement,” said a spokesperson for Hitachi. “As a result, Hitachi has decided to suspend the project at this time from the viewpoint of its economic rationality as a private enterprise.”
The decision by the Japanese firm to shelve the Wylfa nuclear plant as well as a second project in Oldbury has left the UK’s programme of nuclear expansion in disarray – especially due to Toshiba’s abandonment of a nuclear plant in Cumbria last year. The three plants would have been responsible for generating around 15% of the electricity for the UK, and so their closure creates a massive hole for the government to fill before 10 years’ time, when coal and fossil fuel plants are set to close for good.
The move has put around 9,000 construction jobs at risk, works on the two nuclear generators for the Wylfa nuclear plant had been expected to go on until the mid 2020’s. The knock on effect has also caused around 300 job losses at Hitachi’s subsidiary company, Horizon Nuclear Power, with a further thousand jobs lost in the supply chain. Horizon’s CEO Duncan Hawthorne released a statement saying “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.”
These high profile withdrawals have raised questions over whether the government’s policies relating to funding for nuclear projects is sufficient and whether a re-think is needed. Business Secretary Greg Clarke told MP’s that it would have been unfair to ask the taxpayer to foot the bill for nuclear projects when renewables were becoming a far cheaper alternative. “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. Despite this Clark maintained that he was still open to the idea of further nuclear projects in the UK and would be releasing a new strategy to secure funding in the Summer.
Shadow business secretary, Rebecca Long-Bailey criticised the government’s approach to nuclear development in the UK and said it’s strategy was “lying in tatters”.
“Just two months ago, the government’s lack of clarity over funding for new nuclear led Toshiba to withdraw from Moorside. That was a blow to the UK’s energy security, its decarbonisation goals, and the economy of Cumbria,” she said. “But with Hitachi’s decision to withdraw from the Wylfa nuclear power plant, this triple blow has escalated into a full-blown crisis.”
Hitachi’s share prices actually increased by 10% since the first reports that the firm would be withdrawing from the project were released.
The news leaves the UK government is in a difficult situation as how to keep the country powered over the next 20 years. Despite Greg Clarks comments about renewable energy it is yet uncertain whether it will be able to fill the hole left by Hitachi and Toshibas withdrawals. It is looking increasingly likely that the UK will have to fast track it’s renewable energy plans or look to abroad for other countries to provide nuclear infrastructure in order to keep the lights on.