Hiroaki Nakanishi, chairman and CEO of Hitachi, said on 30 January that the setbacks experienced by EDF in developing the Hinkley Point C nuclear power plant in the UK raised questions about how future NPPs, including its GBP14bn ($19.9bn) Wylfa Newydd project on Anglesey are to be funded.
Hitachi subsidiary Horizon is expected to start generating power from the Wylfa Newydd plant by the mid-2020s. Nakanishi told The Telegraph that he had expressed concerns about the expected costs of the project with Philip Hammond during the Foreign Secretary's recent visit to Japan, He said Hitachi had set out "very fair conditions for the making of our investment", but could only commit to a deal it believed was viable.
Nakanishi said "In order to set up the financial conditions [to build Hinkley], Chinese capital was introduced, but what the real result will be - we have a very serious concern about that." Asked if the firm might step back if it believed a viable deal was not on the table, he replied: "Yes".
Horizon is in negotiations with the Department of Energy and Climate Change (DECC) on the amount the Government will guarantee per unit of electricity produced, which will be key to attracting additional finance. Nakanishi sought to distance Horizon from the problems of rivals EDF and Areva, whose European Pressurised Reactors (EPRs) have suffered long delays and spiralling costs, the Telegraph reported. He said the Advanced Boiling Water Reactors to be used in Wylfa were tried and tested in Japan, unlike the EPRs.
Earlier, on 19 January, Hitachi had announced the incorporation of a new UK company - Hitachi Nuclear Energy Europe - as part of its strategy to enhance its UK presence for the engineering, procurement and construction of the Wylfa Newydd NPP.
Hitachi's uncertainty came after EDF failed to make a final investment decision on the GBP18bn Hinkley Point project, although a DECC spokesman said "good progress" was being made. EDF's board had been due to meet on 27 January to finalise the decision on constructing the two EPR units at Hinkley Point C. However, media reports say the decision to go ahead with the project was taken off the agenda and that a final investment decision could now be announced on 16 February, when EDF is scheduled to report its annual results.
Hinkley Point C plant is scheduled to begin operating in 2025 and will provide about 7% of the UK's electricity. Last October, China General Nuclear agreed to take a 33.5% stake in the project. EDF's share stands at 66.5%, but the company said it intends to offer other investors stakes in the project while retaining at least a 50% stake.
EDF union representatives had been pressing the company to delay or drop the Hinkley Point project as the group's finances are constrained by the need to finance the renovation of its ageing fleet of 58 nuclear units in France, cost overruns on the construction of a similar reactors in France and Finland, and a plan to buy a majority stake in Areva SA's troubled reactor unit. Investment in new projects will be financed by reallocating proceeds from sales of other assets, EDF said in December. EDF will reduce its French workforce by 5% as part of a plan to cut operational expenditure by €700m ($761m) by 2018 compared with its 2015 cost base.
However, despite the pessimism and press speculation, EDF told contractors to begin work on the Hinkley Point C project despite not finalising financing, the Guardian reported on 29 January. EDF reportedly told contractors to start "unconstrained" spending on the project, meaning to move forward as if a final decision had been made. Work on the project had been stopped in April, pending the investment decision.
Nevertheless, earlier in January, the UK government today gave the green light for a new power line connection that will form "a major part of the infrastructure" needed for Hinkley Point C. EDF Energy said it already has an agreement in place with UK National Grid to provide the connection "which must be ready well before HPC starts generating electricity". DECC said the project will be the first scheme to use National Grid's new 'T-pylon', which resulted from a competition held in 2011 by the Royal Institute of British Architects, DECC and National Grid for a new pylon design.