The UK government has begun negotiations with a Japan’s Hitachi over the new nuclear plant (NPP) planned for the Wylfa site on Anglesey. Energy secretary Greg Clark told parliament on 4 June that public money could be invested into the Wylfa Newydd project, which had been tentatively scheduled for operation in 2020.
The original Wylfa NPP was shut down in 2015 after more than 40 years of operation. The planned £12bn ($16bn) 2700MWe replacement, comprising two Hitachi advanced boiling water reactors (ABWRs), would have a 60-year operational life and would be run by Hitachi’s UK-based subsidiary, Horizon Nuclear Power. The company submitted its site application in April 2017.
Horizon Nuclear Power, which was formed in 2009 to develop new nuclear plants in the UK, was acquired by Hitachi in 2012. The company is developing plans to build at least 5400MWe of new nuclear capacity at Wylfa and at Oldbury-on-Severn in South Gloucestershire. Horizon says the plants will employ up to 850 people each, once operational, with construction workforces of up to 9000.
Clark told the House of Commons that any direct investment in Wylfa Newydd would be made alongside investment from the Japanese government and Horizon. “Both the National Audit Office and the Public Accounts Committee have recommended that the government consider variations from the Hinkley Point C financing model in order to reduce costs to consumers”, he noted.
“This is an important next step for the [Wylfa Newydd] project, although no decision has been yet taken to proceed, Clark said, adding that the successful conclusion of these negotiations would be subject to "full government, regulatory and other approvals, including but not limited to, value for money, due diligence and state aid requirements.”
"It remains the government's objective in the longer term that new nuclear projects - like other energy infrastructure - should be financed by the private sector," Clark said.
Nuclear Industry Association CEO Tom Greatrex said the announcement “confirmed the Horizon Wylfa Newydd project as the next element of [the UK's] new build programme” and “is good news towards meeting our decarbonisation targets”.
In a statement the next day, Horizon Nuclear Power welcomed the UK government’s announcement noting that “formal negotiations with the UK government will now commence, with a joint focus on ensuring Wylfa Newydd represents good value for consumers”. Horizon CEO Duncan Hawthorne said it was “a clear signal of the government’s commitment to delivering a low carbon future for the UK” and showed “ real momentum behind the project” building on last year’s regulatory acceptance of the ABWR reactor technology. “Our focus now is to ensure we continue to deliver on our key project milestones as we move towards construction.”
Planning documents submitted
Horizon also announced on 5 June that it had applied to the Planning Inspectorate for permission to build the Wylfa Newydd project and had submitted applications for four more key permits. Horizon’s Development Consent Order (DCO) submission comprises some 41,000 pages, 440 documents and over 400 drawings all specifying the nuclear power station and associated work the company wants to develop at the Wylfa Newydd site as well as how it plans to go about it from a technical, logistical and social point of view.
The Planning Inspectorate has 28 days to decide whether the DCO application meets the robust standards that will enable it to be accepted for examination, including consideration of Horizon’s pre-application consultations which date back to 2014. If the DCO is accepted for examination by the Planning Inspectorate, members of the public and other stakeholders will have the opportunity to comment on Horizon’s plans as part of the process. The DCO process takes approximately 17-18 months from submission to determination.
In addition to the DCO, Horizon has submitted applications for a Marine Licence, Operations Combustion permit, Operations Water Discharge permit and Construction Water Discharge permit from Natural Resources Wales.
Move towards funding
UK and Japanese media reported at the end of May that Hitachi’s board had voted to go ahead with negotiations on Wylfa, after the UK government reportedly agreed to increase financial support for the project. The board accepted the principle of a tripartite investment structure under which Hitachi, the UK government and state-backed Japanese entities would become equal investment partners. The UK had reportedly proposed an equal equity split of about £6.5bn among Hitachi, the UK public-private consortium and a group of government-backed Japanese entities.
Bloomberg reported on 31 May that the UK government was ready to provide support to Wylfa Newydd in exchange for a lower guaranteed power price once the two reactors are operating. Richard Harrington, under secretary of state for business and industry told Bloomberg that several funding options were still being discussed, including a direct equity stake in the project, a sovereign guarantee on loans and a partnership between the UK and Japanese governments. “From the government’s point of view, it’s about taking some risk for a lower price for the consumer,” he said. “That’s what the government is looking at and what the Hitachi board were discussing - whether the British government’s position was suitable for them to take it to the next stage.”
The Financial Times said a key factor is the strike price – the guaranteed level at which the plant sells electricity – which is still under discussion. The UK government is expected to back a price about £15/MWh lower than the £92.50/MWh negotiated for the Hinkley Point C nuclear plant that is under development in the UK by EDF.
Harrington confirmed to Bloomberg that the UK has decided the strike price must be less than for Hinkley . “Discussions are based on a decision whether to proceed with the Angelsea-based nuclear power station and whether the model of funding is going to be different from how it was with Hinkley Point C,” Harrington said. “The reduction through technology” is where you get scale from “which in the long run is more important than who funds it.”
Nuclear energy currently provides about a fifth of the UK’s electricity. Most of its 15 reactors are due to close by 2030. With plans to build up to 19GWe of new nuclear capacity the cost of the technology must begin to come down, Harrington said. “Funding has to be arranged in such a way, be it government or private, that there will be a lower cost of it and secondly, that manufacturing and construction techniques change significantly,” he noted. The UK plan could later involve private investors, he added.
Hitachi has said construction at Wylfa Newydd could start next year with the plant beginning operation in the mid-2020s if the project goes ahead.
Photo: Wylfa Newydd (Credit: Horizon Nuclear Power)
