Hinkley Point nuclear fiasco spooks Hitachi boss
By Paul Homewood
The head of Hitachi has warned that the debacle surrounding the construction of Hinkley Point nuclear plant throws up “very serious concerns” about its own investment in the UK.
Hiroaki Nakanishi, chairman and chief executive of the Japanese industrial giant, said the setbacks experienced by Hinkley’s developer EDF raised questions about how future plants including its Wylfa Newydd project are funded.
Hitachi’s subsidiary Horizon is planning to build a nuclear plant on Anglesey that is expected to start generating power by the mid-2020s.
In an interview with The Telegraph, Mr Nakanishi revealed that he had expressed concerns about the expected costs of the project with Philip Hammond during the Foreign Secretary’s visit to Japan this month.
Horizon is in talks with the Government to ensure the Wylfa deal presents value for money for both sides.
Hiroaki Nakanishi, chairman and chief executive of Hitachi Ltd, speaks during a news conference at the World Economic Forum (WEF) in Davos, Switzerland Photo: Bloomberg
Mr Nakanishi said Hitachi had set out “very fair conditions for the making of our investment”, but could only commit to a deal it believed was viable.
“Hinkley Point [raises questions] about what are the real solutions for setting up financial support,” he said.
“Nuclear power construction requires huge money … we need to arrange a financial plan for which the kind of money needed can be introduced.
"Some part is government endorsement, some is more preferable investment conditions from the part of the finance industry.”
Mr Nakanishi said the challenges faced by Hinkley Point could also affect Horizon. “The DECC worries about the stability of the scheduled construction of the [Hinkley Point] nuclear power plant, so some of the conditions – the credit requirements – those kind of things may affect us.
“In order to set up the financial conditions [to build Hinkley], Chinese capital was introduced, but what the real result will be – we have a very serious concern about that.”
Asked if the firm might step back if it believed a viable deal was not on the table, Mr Nakanishi replied: “Yes”.
Horizon is in negotiations with the Department of Energy and Climate Change (DECC) on issues such as the strike price, or the amount the Government will guarantee per unit of electricity produced, which will be key to attracting additional finance.
Anglesey, location of a new nuclear power station to be built by Hitachi and Horizon Photo: ALAMY
Mr Nakanishi said early discussions had been positive and sought to distance Horizon from the problems of rivals EDF and Areva, whose European Pressurised Reactors (EPRs) have suffered long delays and spiralling costs. He said the Advanced Boiling Water Reactors to be used in Wylfa were tried and tested in Japan, unlike the EPRs.
French developer EDF is yet to make a final investment decision on the £18bn Hinkley Point project. A DECC spokesman said “good progress” was being made.
Alan Raymant, chief operating officer of Horizon, said Wylfa talks were “progressing rapidly with the solid backing of Hitachi”.
“We’ve always said we need further finance for the construction phase and we’re confident we can achieve that.
"Our chosen reactor’s unique track record of delivery is very important, but we also need to put in place future revenue and funding arrangements which are right for this project. We’ve begun positive discussions with the Government and we’re very confident we can get to a solution that works for all sides including UK consumers."
Amber Rudd, the Energy Secretary, has described Wylfa as one of a “new fleet of nuclear power stations” that the government wants to back, but added that low carbon technologies also had to be “low cost”.
“The challenge, as with other low carbon technologies, is to deliver nuclear power which is low cost as well. Green energy must be cheap energy," she said in November.