Move by Japanese firm would be blow to UK plans to replace coal plants and ageing reactors

This article is more than 1 year old

This article is more than 1 year old

The Japanese conglomerate Hitachi looks certain to cancel its plans for a £16bn nuclear power station in Wales, leaving Britain’s ambitions for a nuclear renaissance in tatters.

An impasse in months-long talks between the company, London and Toyko on financing is expected to result in the flagship project being axed at a Hitachi board meeting next week, according to the Nikkei newspaper.

The company has spent nearly £2bn on the planned Wylfa power station on Anglesey, which would have powered around 5m homes.

Another Japanese giant, Toshiba, scrapped a nuclear plant in Cumbria just two months ago after failing to find a buyer for the ailing project.

Withdrawal by Hitachi would be a major blow to the UK’s plans to replace dirty coal and ageing reactors with new nuclear power plants, and heap pressure on ministers to consider other large-scale alternatives such as offshore windfarms.

It would also mark an end to Japan’s hopes of exporting its nuclear technology around the world.

Hitachi and the UK and Japanese governments have been negotiating over a guaranteed price of power from Wylfa and a potentially £5bn-plus UK public stake in the scheme.

Talks have proved “tricky to find a solution that works for all parties”, industry sources said.

Unions said the prospect of Wylfa being cancelled was extremely worrying and losing two projects in such a short period “should set alarm bells ringing” about the government’s commitment to nuclear.

Hitachi said it had made no final decision. “No formal decision has been made in this regard currently, while Hitachi has been assessing the Horizon Project including its potential suspension and related financial impacts in terms of economic rationality as a private company,” it said.

The reference to a “potential suspension”, however, was the first official public confirmation that a withdrawal was being considered.

Horizon Nuclear Power, the UK subsidiary behind the scheme, said it “won’t be commenting on rumours or speculation”.

However, an insider said: “There has been a serious rift in Hitachi, and the group that said this is too large and risky an investment of Japanese capital have won out. They pointed to the uncertainty created by Brexit to say this was another reason to pull the plug.”

The Department for Business, Energy and Industrial Strategy said: “Negotiations with Hitachi on agreeing a deal that provides value for money for consumers and taxpayers on the Wylfa project are ongoing.”

It is believed that the deadlock in the negotiations has been due primarily to the Japanese government being unwilling to provide the finance to make the numbers work. Hitachi and the UK government by comparison “had gone a long way”.

The Japanese prime minister, Shinzō Abe, insisted that the fate of the nuclear plant had not been discussed during his talks with Theresa May on Thursday, even though they spent more than three hours together in two separate sessions.

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Hitachi would face a significant but not fatal financial hit from writing off the Wylfa scheme. It has spent nearly £2bn on the power station, including £700m on buying the project from the German utilities E.ON and RWE in 2012.

Rebecca Long-Bailey, the shadow business secretary, said the prospect of Wylfa being cancelled was very worrying for the economy and jobs in north Wales and could have “a significant negative impact on the UK’s energy security, particularly after the collapse of the Moorside power station plans in 2018.”

She added: “The prime minister must tell the public if she discussed Hitachi’s plans for Wylfa with Shinzō Abe during his visit this week.”

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Sue Ferns, the Prospect union’s senior deputy general secretary, said: “New nuclear is of significant strategic importance for the country. The government must not sleepwalk into an energy security crisis by allowing these projects to fail one by one.”

The Welsh government said it was pressing Whitehall to make the project work. “This is a major project with potentially significant economic benefits to Anglesey, north Wales and Wales,” a spokesperson said.

Nuclear critics said a collapse of the scheme was not a disaster but an opportunity for a policy shift. Doug Parr, the chief scientist of Greenpeace UK, said: “We could have locked ourselves into reliance on an obsolete, unaffordable technology, but we’ve been given the chance to think again and make a better decision.”

Sara Medi Jones, the acting secretary general of CND, said: “With offshore wind now cheaper than nuclear it’s clear there is a clean and workable alternative. We just need the political will to make it happen.”

Just one new nuclear power station, EDF Energy’s Hinkley Point C in Somerset, has been given the green light and begun construction. The French company and Chinese firm CGN both want to build more.