4 Dec (NucNet): The UK government has agreed to provide a loan guarantee to Japan’s Hitachi to help it finance a new nuclear power station on the island of Anglesey in north Wales.
The finance ministry said today it would offer the guarantee to Hitachi to help finance its planned 2,600-megawatt Wylfa nuclear power station “subject to final due diligence and ministerial approval”.
In a National Infrastructure Plan published today the government said it hoped to agree an “in-principle guarantee” with Hitachi by the end of 2016 to support the financing of a new nuclear station at Wylfa.
The proposed station, to be called Wylfa Newydd – the Welsh for New Wylfa – will consist of two Hitachi Generation III+ advanced boiling water reactor (ABWR) units.
Hitachi owns two sites for potential new nuclear in the UK – one at Wylfa and the other at Oldbury in Gloucestershire – and according to the UK government plans to build 7.8 gigawatts of nuclear capacity across both sites.
In November 2012, Hitachi completed the acquisition of the UK’s Horizon nuclear project, established in 2009 to build new nuclear at Wylfa and Oldbury, from German utilities RWE and E.ON.
RWE and E.ON had announced in March 2012 that they would be seeking a new owner for Horizon.
Horizon said last month that designs are being “worked up” for two ABWR units as part of a single power station at the Wylfa Newydd site. These proposals, along with more details on the construction timetable, will be set out in detail in the second half of next year, Horizon said.
In October 2013, EDF Group and the UK government reached an agreement on the key commercial terms for an investment contract that could result in the construction of two new EPR units at Hinkley Point C in Somerset, the first new nuclear power station in the UK in a generation.
The key terms of that agreement included a “strike price” of 89.50 pounds (about 146 US dollars, 107 euros) per megawatt-hour, which will increase in line with inflation.
The infrastructure plan published today confirms that investments in low-carbon generation technologies such as renewables, nuclear and carbon capture and storage will in future be underpinned by the new long-term, legally binding contracts for difference (CfDs).
The government said CfDs provide generators with protection from fluctuations in the wholesale electricity price and give greater certainty about future revenues. This reduces risk and helps lower the cost of capital. CfDs will also protect consumers from high bills by clawing back money from generators if the market price of electricity rises above the strike price.
EDF Group also announced the intent of two Chinese companies, China General Nuclear Corporation and China National Nuclear Corporation, to invest in Hinkley Point C as minority shareholders. The infrastructure plan published today says of the China agreement: “This is a significant development as it also demonstrates an appetite for taking on construction risk when financing new projects.”
The infrastructure plan is online:
www.gov.uk/government/news/new-infrastructure-plan-published-by-government
