Hitachi buys Horizon of UK1 January 2013
Hitachi Limited of Japan has bought the UK’s Horizon Nuclear Power for GBP 696 million ($1.1 billion) from German utility joint-venture partners RWE npower and E.On. The transaction is expected to be completed at the end of November.
The owners of Horizon announced in March 2012 that because of financial pressures due to the sudden German U-turn on nuclear power, they would sell the company, which won sites suitable for nuclear power plant construction in Oldbury, Gloucestershire and Anglesey, Wales, in a UK government auction. “It was not an easy decision to take…we needed an earlier benefit from a project,” said Fiona Stark,
E. On UK’s director of corporate affairs, at a 30 October press conference.
The Hitachi Horizon programme involves building two to three 1300 MW-class ABWR-based nuclear power plants at each site, the first of which would be scheduled to come online in the first half of the 2020s.
But first the ABWR design would have to be approved in the UK nuclear regulator’s pre-construction review, the Generic Design Assessment, which the company estimates would take between two to four years.
To assist with the GDA process, and with other work, Hitachi has signed memoranda of understanding with Rolls-Royce and Babcock International. Rolls-Royce’s MOU also covers design engineering, and development of a new instrumentation and control system, Lawrie Haynes, its president-nuclear, said at the press conference. Kevin Thomas, chief executive, support services, Babcock International Group, said that its role would also include support on modular construction, and support in personnel training.
With the deal, Hitachi’s intention is strategic, to develop a strong competitive base in the UK, which it sees as part of its plans to expand globally in nuclear power, said Tatsuro Ishizuka, vice president and executive officer, and president & CEO of Hitachi’s Power Systems company. However, he said that the company is not interested in actually operating any of the ABWRs built. “Recently the market for nuclear has changed to an investment in generation systems. We [believe] that we have to think about purchasing an investment. Over the last few years Hitachi has participated in a petroleum project. We will act as a strategic investor, and share some stake of the NPP,” he said. When asked, “Will you operate it?” he replied: “We will discuss with candidate operators; we need some partners as well.”
It is not Hitachi’s first such strategic investment deal; a joint venture between Hitachi and GE-Hitachi Nuclear Energy offered to become a strategic investor with the ABWR in Lithuania’s Visaginas project in July 2011, but the negative results of a referendum connected with October 2012 elections in the country have put those plans in some doubt.
The choice of the ABWR design is interesting. It would be the first BWR in the UK, but not in Europe: there are GE-designed BWRs in Spain and Switzerland, and others in Sweden and Germany. If the Visaginas project falls through, it would be the first Japanese reactor design in Europe. Also, despite financing the project itself, Hitachi has not chosen the latest, fully-passive reactor design that it has a stake in, the ESBWR, which so far remains on the drawing board.
Instead, it has chosen an older but proven design; there are four ABWR units operating in Japan, and the design has been approved by regulators in Japan, Taiwan and the USA. “A generation 3+ plant, the ABWR was the only advanced reactor that has been constructed, safely, on time, and on budget; no-one else can say that,” Ishizuki said at the press conference. (Recent construction experience has been less successful; the most recent ABWRs still under construction have been hit by post-Fukushima delays (in Japan) and commissioning problems (in Taiwan); see Table 1).
When asked whether Hitachi would be able to build the project under EUR 5 billion, Ishizuki said that it was too early to say. He did say, in response to another question, that the construction schedules remained generic based on a pre-engineering process, but that the construction management process includes an element of cooperation with a UK partner to ‘do construction the UK way.’ Another advantage of the ABWR design is that the company has complete equipment lists to hand, Ishizuki said, and that Hitachi would now begin the process of searching for candidate suppliers. Up to 60% of the first unit would incorporate local content, Hitachi said. To support construction, Hitachi will also build a modular assembly facility in the UK.
The UK government’s secretary of state for energy and climate change Edward Davey said that he was pleased that the result of the Horizon purchase ‘reaffirms the competitive tension in UK nuclear’, in which there are three credible utilities and no over-reliance on one reactor technology. RWE npower’s Volker Beckers echoed these sentiments when asked for more details about the bidding process. Although he did not disclose the number of bidders, he said that there was lots of interest. “When we had made the announcement [to sell], there was no decision on technology, so any new investor in Horizon could take a fresh view. This was a huge benefit to the process, that it was open to all investor groups.”
The future corporate structure of Hitachi’s new UK operation could draw on expertise from both Japan and the UK. Earlier this year, GE-Hitachi Nuclear Energy, which is jointly owned by the two companies, proposed its PRISM fast reactor to dispose of the UK’s stockpiles of plutonium. In fact, it was this joint venture that began the process of UK pre-certification of a more recent reactor design, the ESBWR, in 2007, but pulled out in 2008.
This article was first published in the December 2012 issue of Nuclear Engineering International