Japanese group believed to be demanding direct financial support with consumers making up the difference

This article is more than 2 years old

This article is more than 2 years old

Britain’s hopes for a number of new nuclear power stations could collapse if the government and the Japanese conglomerate Hitachi fail to make a breakthrough on talks for a plant in Wales, a top nuclear lobbyist has warned.

Hiroaki Nakanishi, the firm’s chairman, met Theresa May earlier this month, to press the prime minister for financial support for two reactors at Wylfa on the island of Anglesey.

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The company’s board is understood be meeting on Monday to decide whether it can proceed with the UK’s subsequent offer, believed to include a multibillion-pound loan.

Tim Yeo, chairman of the industry-backed group New Nuclear Watch Europe, said the outcome of the negotiations had huge consequences for other international firms hoping to build reactors in Britain.

“If Hitachi walk away from Wylfa that probably spells the end of new nuclear in the UK,” he said.

The 3GW plant at Wylfa by the Hitachi subsidiary Horizon Nuclear Power would be the UK’s second new nuclear power station after EDF Energy’s Hinkley Point C, under construction in Somerset.

More are planned: EDF wants to build at Sizewell on the Suffolk coast, South Korea’s Kepco at Moorside in Cumbria and China’s CGN at Bradwell in Essex, with EDF’s help.

Hitachi wants to build abroad because of a moribund home market, while the UK government sees nuclear as an important source of low-carbon power.

Despite the protracted discussions between the two parties, London appears to still be committed to making the economics of nuclear work.

“I sense there’s still a lot of political will to make new nuclear happen from government, and backbenchers seem to want it in their areas,” a Whitehall source said.

An industry source said the deal would work if the government offered some form of financial support directly, while energy bill payers footed the rest through a subsidy known as a contract for difference.

That would mean Hitachi receiving a guaranteed price of power, likely to be around £80 a megawatt hour, lower than Hinkley’s £92.50 but still nearly twice the wholesale cost of electricity.

The Department for Business, Energy and Industrial Strategy (BEIS) is understood to be enthusiastically backing the project, while the Treasury, which would have to see an equity contribution or loan for the construction period on government books, is more sceptical.

Paul Dorfman at the Energy Institute at University College London said: “This would mean the hardworking UK taxpayer and energy consumer, who are labouring under ramping austerity, are being asked to stump up for an extraordinarily expensive nuclear plant just at the time that renewable costs are plummeting.”

Facebook Twitter Pinterest The now-defunct Wylfa nuclear power station on Anglesey, and the site of a proposed new nuclear reactor. Photograph: Alamy

Japanese media have reported the UK government’s loan for the project could be as much as £13bn, and put the total cost of the plant at more than £20bn, even more than Hinkley Point C. The details are understood to have been leaked by the Japanese government, not Hitachi, and the UK government has said it “does not recognise” the reports.

Greenpeace said the UK was wrongly pursuing a “dinosaur” technology and should focus on renewables, batteries and interconnectors to other countries.

Kate Blagojevic, the group’s head of energy, said: “It’s unacceptable the Japanese public are hearing about this before the British public, if what we’re hearing is true that over £13bn of British taxpayer money is going to a Japanese company to build a plant in Wales.

“It’s pretty outrageous the government hasn’t been upfront about what they’re proposing and why.”

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A spokesperson for BEIS said: “These discussions are commercially sensitive and we have no further details at this time.”

A Horizon spokesperson said: “It’s no secret we’re in discussions with the UK and Japanese governments, and have been for some time, over support for our project. With these discussions still ongoing it is too early to comment on the specifics of what a future deal may look like.

“We’re confident, given the strategic importance of our project to both nations, we’ll reach a successful conclusion to these discussions in the near future.”