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Hitachi said to be close to suspending UK nuclear plans

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Hitachi said to be close to suspending UK nuclear plans

Hitachi Ltd. is said to be inching closer to suspending plans to build a new nuclear power plant in the U.K. only months after another Japanese conglomerate abandoned its nuclear ambitions in Britain, casting clouds over the future of the country's energy strategy.

Facing an impasse over funding with the British government, the industrial conglomerate said it "has been assessing the Horizon project including its potential suspension and related financial impacts." The company also has plans for a second nuclear project in Oldbury, near Bristol.

The Nikkei Asian Review reported Jan. 11 that the company is expected to decide next week to suspend all work on the 2,900-MW Wylfa Newydd plant on the Isle of Anglesey in Wales and freeze approximately 300 billion yen in assets held by its British subsidiary, Horizon Nuclear Power Ltd. Hitachi, however, said in a statement that no formal decision has been made on the matter.

Writing down the value of the assets would likely result in a loss of 200 billion to 300 billion yen for the fiscal year ending in March, Nikkei said, following several other reports over the last few months that Hitachi is set to abandon the project. By freezing the project, Hitachi hopes to avoid spending billions a month to prepare construction of the plant.

Shares in Hitachi rallied almost 9% to close at 3,346 yen in Tokyo on Jan. 11 following Nikkei's report.

A spokesperson for the U.K. Department for Business, Energy and Industrial Strategy said in an email that negotiations between Hitachi and the government for financing the Wylfa project are ongoing, but declined to comment on the reports that Hitachi is ready to drop the plant.

Subsidy discussions with the government have revolved around a strike price of approximately £75/MWh for the first reactors to be built by Hitachi, according to the Financial Times. Last June, Business and Energy Secretary Greg Clark also floated the idea of taking a direct investment in the project alongside Hitachi and the Japanese government.

According to Nikkei, London initially agreed to arrange more than 2 trillion yen in financing, or around two-thirds of the project's total construction cost, with Japanese and British public-private consortia and Hitachi covering the rest. Hitachi then asked the U.K. to up its commitment because the company could not find enough corporate investors in Japan, but those requests fell on deaf ears, the newspaper reported.

The company would be open to resuming the project at a later date, Nikkei said, citing an unnamed source close to the company.

The expected suspension would be only the latest blow to the U.K.'s plans for new nuclear stations to replace aging reactors and the last remaining coal-fired plants, which the government is mostly phasing out by 2025. In November, Toshiba Corp. announced that it would eliminate its British nuclear developer arm, NuGeneration Ltd., scrapping plans to construct a 3,400-MW plant at Moorside in Cumbria. The project was supposed to start production in 2024 and would have supplied approximately 7% of the U.K.'s electricity.

If Hitachi bows out, China General Nuclear Power Corp. and Electricité de France SA will remain the only companies with plans to build new nuclear power plants in the country. Their jointly developed Hinkley Point C plant in Somerset is not expected to come online until after 2025 following years of construction delays and cost overruns. The companies have plans to start building a first follow-up project, Sizewell C, in 2021.