Reports: Hitachi considering suspending work on UK nuclear programme

Hitachi is preparing to put development plans for a new nuclear plant in the UK on hold following a funding dispute with the UK government, according to reports in the Nikkei Asian Review.

Although any formal decision to suspend work on the Wylfa Newydd plant will not be taken until next week, Nikkei Asian Review reported today the firm's board is likely to put a stop to development.

In response, Hitachi confirmed it is considering suspending the scheme, which would provide 3.9GW of low-carbon power to the UK grid from the mid-2020s.

"No formal decision has been made in this regard currently, while Hitachi has been assessing the Horizon Project including its potential suspension and related financial impacts in terms of economic rationality as a private company," Hitachi said in a statement.

Any suspension of work would deal a major blow to the UK's long term electricity decarbonisation plans, which centre on the development of a raft of new offshore wind farms and a wave of new nuclear power plants.

The reports also come just a day after British Prime Minister Theresa May met with her Japanese counterpart Shinzo Abe to discuss the UK's Brexit plans and the potential impact on Japanese inward investment.

Ditching development at the Wylfa site would invoke a loss of between 200bn and 300bn yen ($2.8bn) according to the Nikkei report, but some commentators have argued the move would be a prudent decision given the nuclear industry's history of project delays and cost overruns.

The UK government has been in formal negotiations with Hitachi about developing the Wylfa Newydd site since June, and has signalled its willingness to invest public money in its construction to secure the contract. If it goes ahead, Wylfa Newydd would be run by Horizon Nuclear Power, a Hitachi subsidiary.

But the Nikkei report suggested discussions with the governent over funding the project have hit an "impasse".

In a statement the Welsh government said the reports over the potential collapse of the scheme were "worrying". "We will continue to monitor the situation very carefully and press the UK government do to everything it can to help bring this project to Anglesey," it said.

The UK government is relying on the development of new nuclear in the UK to meet its legally binding decarbonisation targets from the mid-2020s onwards.

More than 50 per cent of the current ageing fleet of nuclear generators is due to be retired by 2025, while all coal power plants must also close by 2025 under government climate pledges.

New nuclear is seen as a vital source of zero carbon power capable of replacing retiring coal and nuclear plants, but long-standing plans to engineer a "renaissance" in the UK's nuclear sector have been plagued by delays and setbacks.

The Hinkley Point C project was delayed in 2016 after Theresa May took office, has already encountered extra costs, and has been widely criticised for providing French developer EDF with a subsidy contract that opponents maintain is overly generous.

Meanwhile, in November Toshiba announced it is to pull out of plans for a new nuclear power plant in Cumbria and wind down its UK nuclear business NuGen, following a string of financial blows to its business.

Some energy experts now fear the pipeline for new nuclear projects could be further constricted, putting the UK's medium term decarbonisation targets at risk.

But some green campaigners have today welcomed the latest bout of uncertainty for the industry, arguing it provides the government with an opportunity to rethink its decarbonisation plans and increase its focus on lower cost renewables.

"The government's energy policy is in tatters, but this is the opposite of a disaster," said Greenpeace UK's chief scientist Dr Doug Parr. "We could have locked ourselves into reliance on an obsolete, unaffordable technology, but we've been given the chance to think again and make a better decision. Our urgent, immediate dilemma - how to maintain security of supply whilst cutting carbon - can be solved by making offshore wind, at half the cost of nuclear, the backbone of the new power system. The failure of the old technology is the opportunity the new technologies need, and Britain's world-leading offshore wind industry's time has come."