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UK Ready To Introduce RAB Financing If Wylfa Project Fails, Says Report

By David Dalton
14 January 2019

14 Jan (NucNet): UK government ministers will be forced to pioneer a new way of financing nuclear power if Hitachi walks away from a planned new nuclear station at Wylfa Newydd in north Wales, the Sunday Times said.

The London-based newspaper said the suspension of the Japanese conglomerate’s project, expected to be confirmed at a board meeting tomorrow, will force the government to accelerate plans to introduce regulated asset base (RAB) financing, which is popular in the water and infrastructure sectors, for nuclear plants including the Wylfa Newyydd site.

RAB financing 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.

Reports in the UK and Japan last week said Hitachi looks certain to cancel its plans to build the Wylfa Newydd station.

An impasse in months-long talks between the company, London and Tokyo on financing is expected to result in the project being abandoned at Hitachi’s board meeting tomorrow, according to the Nikkei newspaper.

Hitachi and its subsidiary Horizon Nuclear Power have been proposing to build two UK Advanced Boiling Water Reactors at Wylfa Newydd site on the island of Anglesey in North Wales. In June, the UK government confirmed it was considering direct investment in the project.

The Nikkei newspaper said Hitachi has spent nearly £2bn on the planned station, which would have powered around five million homes.

Another Japanese company, Toshiba, scrapped plans to build three Westinghouse AP1000 reactors in Cumbria, northwest England, just months ago after failing to find a buyer for the project.

Hitachi and the UK and Japanese governments have been negotiating over a guaranteed price of power from Wylfa and a potentially £5bn-plus UK public stake in the scheme.

Hitachi said it had made no final decision. “No formal decision has been made in this regard currently, while Hitachi has been assessing the Horizon project including its potential suspension and related financial impacts in terms of economic rationality as a private company,” it said.

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