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Hinkley Point nuclear fiasco spooks Hitachi boss

February 1, 2016
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By Paul Homewood  

 

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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.

 

Wylfa Power Station, Wylfa Head, Anglesey, North Wales - Second new nuclear plant given go-ahead for as Government sells off Eurostar stakeAnglesey, 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.

 http://www.telegraph.co.uk/finance/newsbysector/energy/12128405/Hinkley-Point-nuclear-fiasco-spooks-Hitachi-boss.html

8 Comments leave one →
  1. February 1, 2016 5:48 pm

    I live ~ 8 miles from Wylfa, it ceased production last mth ‘Wylfa B’ (if it goes ahead) wont start production until 2028/30 by which time all the nuclear skills we’ve amassed over the years will be lost.

    We have 3 wind farms & a few hectares of solar; madness

    The politicians like to call Anglesey called ‘Energy Island’ ….presumably because of the amount we import !!

  2. February 1, 2016 6:05 pm

    Power today has an article about Russian developments that seem to put them in the lead for nuclear power: they have commissioned and are operating a Fast Breeder Reactor at 880 MWe. If we could forget the foolish anti-Putinism that the USA are pushing on us, this would look to be the way forward, they are selling their nuclear stations to Egypt and Turkey at far lower prices than France and Japan, even allowing for regulationary costs.

  3. February 1, 2016 7:44 pm

    UK is in serious trouble but doesn’t generally recognize it yet. If coal stations continue closing as planned/announced, you will not be able to keep the lights on in winter. Reserve margins even givennthe demand side emergency arrangements are less than half of what they should be. Nuclear takes too long to construct even started today. Only ‘fast’ answer is CCGT, about 3 years per (less for existing sites, 2-2.5 years). But no CCGT are being built, and the two announced have struggled for financing to get started. The simple reason is found in your DUKES stats. UK CCGT capacity factor in 2007, a respectible 65%. That still low given these plants can be run >90%. CCGT capacity factor in 2013, 28%. Why? Forced wind flexing. No one in their right mind is going to invest in newCCGT then run it at a third of its capability to deliberately lose money.
    This is the same reason why RWE is shutting Irsching this year in Bavaria, two modern CCGT completed in 2010 and 2011.
    Madness. Perhaps it will stop after UK goes dark in winter and relatives of the many resulting deceased sue and vote.

    • February 1, 2016 8:48 pm

      It’s even worse!

      It’s technically possible to build ccgt in 3 or 4 yrs. But our sclerotic planning systems can easily double that.

  4. February 1, 2016 8:21 pm

    Present UK Energy policy seems like fitting sirens and flashing lights to a hearse.

  5. Graeme No.3 permalink
    February 1, 2016 9:53 pm

    Translated from the japanese, £105 per MWh and a building time free from objectors or no reactor.

  6. Paul2 permalink
    February 1, 2016 11:40 pm

    Some good news for a change:

    https://yougov.co.uk/news/2016/01/29/global-issues/

  7. February 2, 2016 10:06 am

    Future UK energy secretaries are going to be cursing Miliband, Davey, Huhne & co.

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