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Hitachi Poised to Exit U.K. Nuclear Power Project Wednesday

Hitachi Plans to Exit U.K. Nuclear Power Project, Mainichi Says

Hitachi Ltd. is poised to withdraw from a proposed U.K. nuclear power plant, according three people familiar with the plans, in another blow to the troubled project and the nation’s effort to replace its aging atomic fleet.

Hitachi’s board will decide as soon as Wednesday to exit the Wylfa nuclear power project in Wales, the people said. Work was suspended on the 20 billion-pound ($26 billion) project in January 2019 after failing to reach a financing agreement with the U.K. government and the Japanese firm recently concluded it was impossible to restart work. The news was first reported Tuesday by Japan’s Mainichi newspaper.

Hitachi Poised to Exit U.K. Nuclear Power Project Wednesday

Llinos Medi, the leader of Anglesey Council, said she’d been informed of plans by Hitachi to pull out of the project, but the decision still needs to be ratified. “If this decision is confirmed - then it will be a devastating blow to the Anglesey economy. The Wylfa Newydd project had the potential to transform the Anglesey and North Wales economy, particularly that of North Anglesey,” she said, according to an emailed statement.

A Tokyo-based spokesman for Hitachi said Tuesday that the company is exploring multiple options and nothing has been decided yet. Horizon Nuclear Power Ltd., Hitachi’s subsidiary developing the project, declined to comment.

The U.K. government had put nuclear at the heart of its effort to attract billions of pounds of investment in new power plants and create thousands of jobs but has hit several hurdles. How to finance these hugely expensive pieces of infrastructure remains the biggest unanswered question as well as how much involvement Britain wants from foreign investors.

France’s Electricite de France SA is the only company currently building new nuclear plants in Britain and it is waiting to hear from the government how it can help finance its second new station -- Sizewell C.

Prospects for the Wylfa plant were looking slightly better last month when Horizon said it was engaged with the U.K. government on reviving the project. The government is expected to give some communication on how it will finance new nuclear projects in its energy white paper next month.

The Japanese company had been maintaining a small staff at Horizon and continued to push for planning permission after the government began reviewing a “regulated asset base” funding model, which curbs construction risk for developers by having consumers pay upfront for a new plant through their energy bills.

Planned U.K. nuclear power projects located at Wylfa, Oldbury and Moorside have been suspended since Hitachi and Toshiba Corp. were unable to secure private financing or partnerships. Over the last decade, Japan’s manufacturers scooped up nuclear projects around the world in a bid to supply their own reactor technology and support fledgling sales, but the risk of rising costs, safety concerns and stiffer competition from other energy sources has led to nearly all being scrapped.

Hitachi bought Horizon from Germany’s two largest utilities for 697 million pounds ($894 million) in 2012 with the backing of the U.K. government.

©2020 Bloomberg L.P.