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Hitachi preparing to pull out of nuclear project in blow to UK climate ambitions

UK energy

Hitachi preparing to pull out of nuclear project in blow to UK climate ambitions

Expected withdrawal from Anglesey scheme will deal fresh blow to power station programme

The existing Wylfa power plant on Anglesey, north Wales © Warren Kovach/Alamy

Hitachi is preparing to abandon plans to build a new power station at Wylfa on Anglesey, an island off the coast of north Wales, in a severe blow to Britain’s struggling nuclear power programme.

The Japanese industrial group is expected to make the formal decision at a board meeting in Tokyo on Wednesday, said multiple figures close to the project.

The move is the latest blow to the UK’s nuclear plan at a time when it is rushing to cut the emissions that cause climate change in order to meet a “net zero carbon” target by 2050.

Wind has taken a growing share of the UK electricity market, at times exceeding 50 per cent of all generation during 2020. But nuclear is seen by many in the industry as providing a steadier less weather-dependent base of supply. 

Hitachi’s withdrawal from Wylfa would also hit UK plans to reduce reliance on China, which has been keen to fund other nuclear projects in the face of growing opposition from UK politicians.

Hitachi bought the Anglesey site — dubbed Horizon Nuclear — from two German utility companies for £697m in 2012.

An artist’s view of the planned Wylfa power plant on Anglesey © Horizon Nuclear Power/EPA

But the £20bn scheme was mothballed in January 2019 after the company failed to secure a financial agreement with the UK government. Hitachi said at the time that the project posed “too great a financial challenge” even with ministers proposing a taxpayer investment into the scheme.

However, Hitachi maintained a skeleton staff and continued to seek planning permission for the project.

As recently as August the company’s management was still optimistic that the site could be revived. Duncan Hawthorne, chief executive of Horizon, said at the time: “What I’ve been trying to do . . . is convince people that our suspension has not in any way undermined our ability to restart quickly . . . We are ready to go.” 

Horizon executives believed they were making progress in recent weeks, holding detailed discussions with UK officials, but appear to have been blindsided by decisions made by Hitachi in Tokyo.

However, a person close to Hitachi said the Japanese group’s stance had not changed since it suspended the project early last year and that Tokyo had not backed recent moves for a revival. 

One figure close to the project on Tuesday said Hitachi was “totally quitting” in a sudden reversal. “All hell is breaking loose. So much for their 100-year commitment,” the person said.

Another figure close to Hitachi confirmed the company was set to announce that it was abandoning the site.

The UK government has been trying to launch a new nuclear programme for more than a decade by levering in international private finance, but has had limited success.

Only one new power station is under construction — at Hinkley Point in Somerset, south-west England, under a consortium led by France’s EDF. That scheme, which is over budget and running several years behind schedule, will receive indirect taxpayer subsidies through a “contracts for difference” scheme, which guarantees a company a price for the electricity it generates.

Construction under way at the Hinkley Point C nuclear power station in Somerset © Luke MacGregor/Bloomberg

Japan’s Toshiba has dropped its plans to build a new nuclear reactor at Moorside, Cumbria. Hitachi itself previously scrapped plans for a separate plant at Oldbury-on-Severn in Gloucestershire.

Meanwhile, there is a growing backlash among Tory MPs against plans for new power stations at Sizewell and Bradwell that will involve Chinese state-owned group CGN alongside EDF.

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Hitachi had been hoping for clear guidance from the UK government about a new “regulated asset base” funding model, under which taxpayers would pay more upfront for new power stations, substantially reducing the company’s financing costs.

However, the government is only expected to set out broad outlines for the future of nuclear power when it publishes an energy white paper in the autumn.

“This decision from Hitachi is a serious blow to the economy of north Wales and for our chances of hitting net zero [emissions],” said Sue Ferns, senior deputy general secretary of the union Prospect.

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