Hitachi’s £16bn Wylfa station on Anglesey is next proposed project after Hinkley Point C

This article is more than 1 year old

This article is more than 1 year old

Fresh doubts have been raised over prospects for the UK’s new nuclear power programme after a report that Hitachi is considering axing plans for a plant in Wales.

The Japanese conglomerate’s mooted 2.9GW nuclear power station on Anglesey is next in line in the UK’s nuclear plans after EDF Energy’s 3.2GW Hinkley Point C scheme in Somerset.

However, Japan’s TV network Asahi reported that the Wylfa Newydd scheme may be scrapped, sending Hitachi’s shares up by almost 3%, before ending up by 1%.

The project is expected to be discussed at the Japanese multinational’s board meeting on Tuesday.

The Guardian understands that cancelling the power station would result in Hitachi having to write off its near-£2bn investment in the project.

Hiroaki Nakanishi, the board’s chairman, last week admitted the company was struggling to find investors willing to finance the plant. Hitachi faced “an extremely severe situation”, he said.

If the Wylfa project was to fail it would be a major blow to the UK’s hopes for a fleet of new nuclear plants to meet its carbon targets and fill the energy gap created by old coal and nuclear plants being taken offline.

Ministers have already been hit by the recent collapse of plans for a significant new nuclear plant in Cumbria after Toshiba failed to find a buyer for the Moorside project.

However, it would be surprising if Hitachi pulled the plug on Wylfa at this stage. Tripartite talks are still ongoing between the firm and the UK and Japanese governments.

The business secretary, Greg Clark, said in June that the UK was considering taking a “direct investment” in the power station, overturning decades of policy of not taking a stake in civil nuclear power. But such projects should be financed by the private sector “in the longer term”, he said.

The UK is understood to have offered to take at least a £5bn-plus public stake to make the financing of the £16bn power station work.

The company and government are still continuing with talks, which insiders described as “fairly intense”.

Hitachi’s British subsidiary Horizon will need to reach an agreement with the UK by the middle of 2019, if it is to clear EU state aid approval and hit its timetable of making a final investment decision in mid-to-late 2020.

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Wylfa is one of two sites that Hitachi is considering, with an identical 2.9GW plant planned for Oldbury in Gloucestershire.

A Horizon spokesperson said: “Since the secretary of state’s statement to the House in June this year we’ve been in formal negotiations with the UK government regarding financing of the Wylfa Newydd project in a way that works both for investors and the UK electricity customer.”

The company said the negotiations were commercially confidential and it would not comment on rumours or speculation.

Greenpeace UK said investors could see the economics of new nuclear did not add up. “As Hitachi contemplates whether to pull out of Wylfa, UK government might contemplate whether they’ve been backing the wrong horse for many years,” said Doug Parr, the group’s chief scientist.