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Hitachi books huge loss as Welsh nuclear project abandoned

Highlights

2.7 GW project ditched, site retained

RAB investment model being considered

New nuclear program shrinking

London β€” Hitachi is to book a $2.76 billion impairment loss after abandoning the Wylfa Newedd nuclear project in north Wales, the Japanese company said Thursday.

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The UK government said it would propose alternative nuclear funding models after Hitachi confirmed suspension of the GBP16 billion ($20.6 billion), 2.7 GW project.

"Despite the best efforts of everyone involved the parties have not been able to reach an agreement" that secured a reasonable return for a private enterprise, Hitachi said.

A spokesperson for the UK's Department of Business, Energy and Industrial Strategy (BEIS) said "despite extensive negotiations and hard work by all sides, the Government and Hitachi are unable to reach agreement to proceed at this stage."

Hitachi is to retain ownership of the Wylfa site on Anglesey while discussions continued with the government on the site's options, the department said.

In the meantime the government was reviewing the viability of a Regulated Asset Base model "as a sustainable funding model for future projects and expect to update on these findings in summer 2019," it said.

Cancellation of Wylfa follows abandonment of the 3.4 GW Moorside nuclear project in Cumbria by Toshiba in November.

Loss of two projects reduces the UK's new nuclear program to one in construction (Hinkley Point C, 3.2 GW) and two in active development (Sizewell, 3.2 GW, and Bradwell, 2.2 GW).

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BEIS said the loss of Wylfa had no implications for security of supply.

"The government is committed to a dynamic energy market, with a range of options for meeting future energy demand, including renewables, storage, interconnectors, new nuclear and more," it said.

Union Unite disagreed. Without Wylfa there was no way the country could meet its climate change obligations, the union's national officer Peter McIntosh said.

"There are very real concerns over how we will keep the lights on for industry and consumers in the coming decades. We need to replace the current generation of nuclear plants and Wylfa is a key part of that program," he said.

Some 6.8 GW of UK nuclear capacity is due to close between 2023 and 2030. Only Sizewell B (2 GW) is set to operate into the 2030s.

--Henry Edwardes-Evans, henry.edwardes-evans@spglobal.com

--Edited by Alisdair Bowles, newsdesk@spglobal.com