Taking another steep hit from its beleaguered nuclear business, Toshiba Corp. said it will withdraw from construction of the proposed 3.8-GW Moorside nuclear plant in the UK, a project expected to comprise three AP1000 reactors.

The Tokyo-based conglomerate said on November 8 that it had also taken steps to “wind up” NuGeneration Ltd. (NuGen), a UK-based new nuclear development company. Toshiba acquired 60% of outstanding shares of NuGen, which planned to build Moorside near Sellafield, on the West Cumbria coast in northwest England, in June 2014. The company acquired the remaining 40% of NuGen’s shares from ENGIE in July 2017, as it was embroiled in a financial debacle involving a former subsidiary, U.S.-based power technology giant Westinghouse, in the U.S.

The decision to liquidate NuGen was based on Toshiba’s “policy to eliminate risks to the overseas nuclear power construction business,” the company said in a statement. Toshiba said it had invited new investors to participate in NuGen and it was reportedly in talks with South Korea’s state-run Korea Electric Power Corp. (KEPCO) to sell a stake in the company. “However, notwithstanding negotiations with multiple companies, Toshiba is unable to anticipate to complete the sale of NuGen during FY2018, to March 31, 2019. After considering the additional costs entailed in continuing to operate NuGen,” it said. “Toshiba recognizes that the economically rational decision is to withdraw from the UK nuclear power plant construction project, and has resolved to take steps to wind-up NuGen.”

The proposed winding-up process is slated to wrap up this January. Toshiba expects to incur consolidated losses, before taxes, of about $132 million (15 billion yen).

The UK’s Nuclear Future Takes a Hit

The decision is a blow to Moorside, a project the UK government was banking on to provide 7% of its power needs from 2025. The UK currently has 15 reactors generating about 21% of its electricity but almost half of this capacity is to be retired by 2025. Moorside’s cancelation leaves eight units that are planned or proposed: two EPRs at EDF Energy’s Hinkley Point C project in Somerset; two more EPRs at Sizewell in Suffolk; Horizon’s two ABWRs at Wylfa, where construction could begin next year; and two more Horizon ABWRs at Oldbury in Gloucestershire.

The Moorside site was originally nominated through the government’s strategic siting assessment in 2008. In August, the UK Department for Business, Energy and Industrial Strategy urged NuGen to provide information that supports the Moorside site, so it could be listed in a future national policy statement that defines development of the country’s new sources of energy between 2026 and 2035.

On November 8, NuGen CEO Tom Samson lamented Toshiba’s decision but noted the company had been supportive during the “turbulent journey” of trying to find a buyer for the company. “Many questions will be asked about why NuGen has been unable to find a buyer and continue forward at Moorside and I think there is really one very simple reason—that we were caught between a series of unplanned and uncontrollable events,” he noted.

The start of NuGen’s sale process began after Westinghouse filed for chapter 11 bankruptcy protection in March 2017, Samson said. However, it was “further complicated” by the emergence of a potential new policy framework from the UK government to finance nuclear new builds—the regulated asset base (RAB)—in the middle of the sale process. “Unfortunately, given that the RAB model is still in early stages of development, has not been determined as policy yet and still faces a lengthy legislative process before it can be applied to new nuclear, it has not proven possible to find a buyer willing to take that level of policy and legislative risk when entering the UK; hence we have been unable to bring an acquisition to a conclusion,” he said.

The RAB model is still, however, the right answer for sustaining the UK’s nuclear new build program because it addresses immense financial risks faced by nuclear developers, Samson said.

Toshiba’s Gradual Nuclear Exit

After Westinghouse went bankrupt, Toshiba in June 2017 agreed to pay a maximum of $3.68 billion to the owners of the two-unit AP1000 project at Plant Vogtle, in Georgia, and in July 2017, it agreed to pay a maximum of $2.17 billion to SCANA subsidiary South Carolina Electric & Gas and Santee Cooper, for a half-built project at V.C. Summer (which the owners decided to scrap only weeks later).

Then in January 2018, Toshiba announced Westinghouse would be sold to Toronto-headquartered Brookfield Asset Management. The deal involved selling all shares in Westinghouse-related assets—Toshiba Nuclear Energy Holdings (US) and Toshiba Nuclear Energy Holdings (UK) Limited—for $1. This August, Brookfield completed that purchase, marking Westinghouse’s exit from bankruptcy protection as a restructured company.

On November 8, Toshiba also announced it would sell its U.S. liquefied natural gas (LNG) business to China’s ENN Group as part of a new five-year business strategy. The move includes 7,000 job cuts—or 5% of its workforce—over five years.

—Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)