Investors Line Up for UK’s Next Big Nuclear Reactor Projects

With Hinkley Point underway the UK government is lining up investors for the next massive project which is to build twin 1380 MW Hitachi-GE ABWRs at Wylfa Newydd on the Welsh Coast.

The Japanese government, in an effort to promote that nation’s nuclear reactor technology, is putting together a financing package worth at a minimum of $8.7 billion for the next massive nuclear power station in the UK. That’s about 45% of the cost of the project. The UK government is expected to put up another $2-3 billion. The rest must come from outside investors. The total cost of the project is estimated to be least $20 billion and could be closer to $24 billion by the time it breaks ground.

By leading with the aid package, the hope is that other Japanese financial institutions will follow suit with an addition $4 billion. One of the incentives for other outside investors will be a fixed-rate power purchase agreement which insures the revenue needed to pay off loans will be there when it is needed.

According to a profile of the UK nuclear new build published by the World Nuclear Association, Babcock International has expressed an interest in taking an equity stake in the project, and, presumably, also a role as either a supplier of key components or as an EPC contractor for it or both. The lead contractor to build the site is Bechtel.

Representatives of the Japanese and UK governments hope to have a financial plan in place sometime in 2017. Meetings have been taking place between a virtual who’s who of top level finance ministers from both countries. They include;

  • Japan’s Finance Minister Taro Aso
  • Chief Cabinet Secretary Yoshihide Suga
  • METI Chief Hiroshige Seko
  • UK Chancellor of the Exchequer Phillip Hammond
  • UK Business and Energy Secretary Gregg Clark

horizon logoDuncan Hawthorne, the CEO of the Horizon Corp. which will build and operate the twin ABWRs, was circumspect about the negotiations. He told the Telegraph UK on December 15 that negotiations with Japan and the UK government were “complex and ongoing,” and added that delivery of the project “at a competitive price” was a key driver of the discussions.

The UK Office for Nuclear Regulation has posted on its website a calendar of milestones for completion of the generic design assessment (GDA) for the ABWR. According to that schedule, the process is expected to be complete in December 2017.

Japan’s Nuclear Export Strategy Hits Some Potholes

What’s significant about Japan’s strong push forward into the UK nuclear market with financial support is that it occurs after the Brexit vote. If Bexit is implemented, severing trade and economic ties with the European Union, it will also lift limits on so-called subsidies of nuclear power projects. Austria, which has a long history of government sanctioned anti-nuclear activism, sought to stop the Hinkley Point project on these grounds.

Japan is pushing the export of its nuclear technology for two reasons. As a result of the Fukushima disaster, it isn’t likely to build any new reactors at home for a long time. Also, it is competing in the UK for market share since the Hinkley Project gives Chinese state owned nuclear firms the option to build two 1000 MW Hualong One PWR type reactors at the Bradwell site once Hinkley Point is up and running. These Chinese firms have taken a 33% stake in Hinkley Point and plan to finance the majority of the costs of the Bradwell project.

Meanwhile, Japan recently suffered a setback in its export strategy with the decision by Vietnam to cancel construction of a fleet of nuclear reactors which would have cost the small Southeast Asian country more than $20 billion. Four of the reactors would have come from Japan although specific vendors were never publicly disclosed.

Efforts by Japan’s Toshiba, owner of Westinghouse, to build six 1150 MW AP1000 reactors at a site on the west coast of India remain bogged down by that nation’s insistence that there be a “reference” plant in operation to prove that it would work.

Westinghouse is building eight AP1000s – four in China and another four in the US.  All of them will come online between 2017-2019. India is also asking for a loan from the U.S. Export-Import bank, since American jobs would be created by the project, but the Republican led Congress appears to be in no mood, for now, to lift restrictions on the bank’s lending limits.

South Korea Explores Entering the UK Nuclear Market

Reuters reported on December 15 that UK Business and Energy Secretary Greg Clark met with South Korea’s energy minister Joo Hyung-hwan to discuss possible exports of South Korean nuclear technologies to the UK.

The South Korean delegation, led by Hyung-hwan medt with UK NuGen CEDO Tom Samson. The NuGen project is a joint venture between Westinghouse/Toshiba and French energy utility Engie to build three Westinghouse AP1000s at the Moorside site on a coastal site in Cumbria northwest England.

The discussions reportedly centered on KEPCO building an equity stake in the Moorside project. When complete it will delivery about 3.5 Gwe of electrical power and could cost between $14 and $18 billion to build.

The project would benefit in terms of lessons learned from the completion of four Westinghouse AP1000s in the US and another four in China. The advantages of having this experience would be a confidence builder in terms of controlling costs and delivering the reactors on time.

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Dan Yurman ~ For breaking nuclear news follow me on Twitter @djysrv or http://www.twitter.com/djysrv ~ Welcome Page for Neutron Bytes Blog ~ https://neutronbytes.com/2014/08/31/welcome-post/ Email me: djysrv@gmail.com ~ Mobile via Google Voice 216-369-7194 ~ Header Image Credit: http://apod.nasa.gov/apod/ap110904.html ** The content of this blog is protected by copyright laws of the U.S. "Fair use" provisions apply. The RSS feed is for personal use only unless otherwise explicitly granted **
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