08.11.2018_No222 / News in Brief

Toshiba Confirms Plans To Pull Out Of Moorside Nuclear Project In UK

Plans & Construction

8 Nov (NucNet): Toshiba has today confirmed plans to wind up its UK nuclear arm NuGeneration, which was leading a project to develop the Moorside nuclear power station in Cumbria, northwest England.

Toshiba said in a statement it would take a JPY18.8bn (€143m) hit from closing NuGen, which had already been cut to a skeleton staff, after it failed to find a buyer for the project to build three Westinghouse AP1000 nuclear power units.

After a board meeting on Thursday, Toshiba said that it was winding up NuGen because of its inability to find a buyer and the ongoing costs it was incurring. The company has already spent more than €459m on the project.

Toshiba said the business would start being wound up in the new year. It said: “After considering the additional costs entailed in continuing to operate NuGen, Toshiba recognises that the economically rational decision is to withdraw from the UK nuclear power plant construction project, and has resolved to take steps to wind up NuGen.”

NuGen said the announcement comes after 18 months of negotiations with a range of potential new owners. “Unfortunately, it has not been possible to successfully conclude those negotiations.”

NuGen said it has retained a team to support the implementation of a winding-up process and will work with Toshiba and its other stakeholders.

“Whilst NuGen will not be taking the project forward, the Moorside site in Cumbria remains a site designated by government for nuclear new build, and it is now for the Nuclear Decommissioning Authority as the owner of the site and the Government to determine its future.”

The Moorside project – which would have provided 7% of the UK’s electricity needs from 2025 – first ran into trouble when Toshiba’s US nuclear unit, Westinghouse, was declared bankrupt last year, leading it to search for a buyer to take over the scheme. Toshiba also said at the time it would no longer take forward new nuclear projects overseas.

South Korean energy firm Korea Electric Power Corporation (Kepco) initially appeared likely to rescue the project, but despite talks with the UK government it later pulled out due to a change of leadership at Kepco and new approach to financing nuclear power in the UK.

Unions accused the government of not doing enough to help it succeed. GMB, which represents energy sector workers, said it has long argued that the government should take a stake in the financing of the project rather than leaving it at the mercy of foreign companies.

Justin Bowden, the GMB national secretary, said: “The British government has blood on its hands as the final sad but predictable nail is banged into the coffin of Toshiba’s jinxed jaunt into nuclear power.”

In September NuGen boss Tom Samson said he was in favour of using the regulated asset base (RAB) model to fund the “transformational” Moorside project.

The RAB model is essentially a type of contract drawn up with the backing of government which calculates the costs and profits of a project before it is started, and allocates an investor’s profits from day one.

A government regulator sets a fixed number, the RAB, which attempts to account for all the future costs involved in the completion of a project. The regulator then also sets a fixed rate of return for the investors based on those costs.

Once NuGen is wound up at the end of January, the Moorside site in Cumbria will be handed back to the NDA, a government body.

The Department for Business, Energy and Industrial Strategy said: “We understand that Toshiba have faced a difficult decision in ending their involvement in new nuclear projects outside of Japan in light of their well-known financial challenges.

“All proposed new nuclear projects in the UK are led by private sector developers and while the government has engaged regularly with the companies involved, this is entirely a commercial decision for Toshiba.”

The only new nuclear power station to get the go-ahead so far is EDF Energy’s Hinkley Point C in Somerset, which started construction in 2016 and is expected to be operational between 2025 and 2027.

Related reports in the NucNet database (available to subscribers):

  • NuGen Boss Supports RAB Financing Model As Way Forward For Moorside (News in Brief No.189, 24 September 2018)

Source: 

NucNet

Editor:

David Dalton

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