Hitachi scraps UK nuclear plan with RM11.5b writedown

May’s govt announced the UK will outline a new strategy later this year

By BLOOMBERG

TOKYO • Japanese conglomerate Hitachi Ltd confirmed it will halt work on its nuclear power project in the UK, delivering a blow both to its ambitions to export more of its technology and Britain’s effort to revive its atomic industry.

The company will book a loss of about ¥300 billion (RM11.52 billion) after suspending indefinitely its plans to build reactors at the site in Wylfa, Wales. Prime Minister Theresa May’s government announced the UK will outline a new strategy later this year.

“Nuclear is an important part of our mix,” James Slack, a spokesman for the May, told reporters in London yesterday. “We’ll be setting out more details of our approach to new nuclear in the energy white paper which is due to be published in the summer.”

The decision inflamed debate about how central nuclear plants should be to Britain’s energy policy.

Unions and nuclear industry backers say the nation is at increasing risk of blackouts since all except one of its existing nuclear plants must close by 2030. Environmentalists noted that a rapid plunge in the cost of wind and solar adds options beyond nuclear power accessing low-pollution energy sources.

Hitachi’s departure is the latest knock to the government’s ambitions to build six or more nuclear stations supplying 18GW of electricity, about a fifth of the current total generation capacity. In November, Toshiba Corp withdrew from the Moorside plant in northwest England, leaving the Hinkley Point project in the southwest as the only UK atomic plant under construction.

“Hitachi’s announcement coming so soon after the Moorside fiasco raises the very real prospect of a UK energy crisis,” said Justin Bowden, national secretary for energy of the GMB union.

Greenpeace’s chief scientist Doug Parr said nuclear costs are rising, while the price of renewables is falling and that “a clever move now would be for the government to accept that the nuclear bet didn’t pay off and have an urgent rethink about the future of UK energy”.

For Hitachi and Japan, the move is a setback for ambitions to export more nuclear technology. Eight years after an earthquake caused a meltdown at an atomic plant in Fukushima, the industry faces opposition at home and fewer places where it can sell abroad.

“The UK was the last hope for reactor exports” for Japanese companies, Stephen Thomas, emeritus professor of energy policy at the University of Greenwich, said by email. “As to Japan’s future in nuclear, I think it is the end as a reactor vendor, certainly outside Japan.”

Even before scrapping Wylfa, the Tokyo-based manufacturer was shifting away from the nuclear power industry, seeking to expand in higher growth sectors such as power transmission and distribution. Hitachi’s shares jumped the most in more than two years last Friday after the Nikkei newspaper first reported it would halt work on the project.

Hitachi bought Horizon Nuclear Power, developer of the Wylfa project, from Germany’s two largest utilities for £697 million (RM3.69 billion) in 2012 with the backing of the UK government.

The company has now moved to shelve Wylfa after it failed to find Japanese investors or agree on financing with the British government, which has been swept up in Brexit turmoil.

Over the last decade, Japan’s manufacturers scooped up nuclear projects around the world in a bid to supply their own reactor technology and support fledgling sales. But the risk of rising costs and safety concerns, coupled with stiffer competition from renewables and gas-fired facilities, has led to nearly all Japan-backed projects getting scrapped because of a lack of investors.