Hitachi Calls it Quits for UK Wylfa Nuclear Project

  • Hitachi Ends Its Engagement at Wylfa
  • Rolls Royce to Offer Mid-size Reactor as a Lifeline for Wylfa Site
  • Nuclear Essential to Hydrogen Future, says LucidCatalyst

Hitachi Calls it Quits for UK Wylfa Nuclear Project

  • UK / Hitachi Confirms Plans To Scrap Wylfa Newydd Nuclear Project
  • Company blames lack of a viable financing package from the UK Government

(NucNet) Hitachi this week announced that it is permanently scrapping plans to build two 1350 Advanced Boiling Water Reactors (ABWR) at the Wylfa Newydd nuclear site in north Wales and at the Oldbury site.

horizon logoThe Japanese firm blamed the lack of a viable financing structure in an “increasingly severe” post-Covid investment environment. It also cited the uncertainties created by the UK government as a result of the erratic path taken by PM Boris Johnson to address the UK exit from the European Union called Brexit.

  • For the UK the decision is a first class energy policy disaster caused by indecision and a lack of political will to support the project with a feasible financial package comprised of guaranteed rates and equity investment from the government.
  • The latest decision by Hitachi is a severe blow to efforts by Tokyo to promote infrastructure exports as a key driver of economic growth.

Of six sites originally identified over a decade ago for replacements for the UK’s nearly ancient nuclear fleet, only one, Hinkley Point C, is under construction, three have been mothballed and two others are waiting approval. Hinkley, Moorside, Wylfa, Oldbury, Bradwell and Sizewell were identified as the sites for the most significant national wave of new nuclear power construction under the government of then PM David Cameron.

nuclear-power-in-the-UK_thumb.png

Current and Planned Nuclear Power Stations in the UK. Map: BBC

The Wylfa project had an estimated cost of $16 billion for the two reactors, but some estimates reported in the news media, without substantial supporting evidence, put the price at one-third more or $24 billion. This number created a political backlash and  contributed to the UK government’s delays in approving the use of  the RAB method and equity financing for the project.

Strike Price Strikes Out

The UK government is said to have failed to offer a “strike price” for electricity that gave Hitachi’s investors a return on investment that included the “risk premium” for the long lead time to see profits from construction of the nuclear power station.

The nuclear strike price refers to the price the government will guarantee per unit of electricity produced.

Over the years successive UK governments have tried to find ways of making investment in new nuclear power plants an attractive and secure proposition – without breaking their pledge of no direct subsidies from the public sector. In effect, the UK government tried to finesse its response to climate change without changing the paradigm of building new nuclear power plants that provide CO2 emission free electricity.

As a politically expedient policy, it flew in the face of financial reality that indicated that for a large nuclear new build, only governments can take on the kinds risks that come with these projects.

In 2016 the government proposed new nuclear reactors at Hinkley in Somerset with a strike price of £92.50 per megawatt hour (Mwh) which came in for fierce criticism. At the time the wholesale price of electricity was about £44/Mwh or less than half the price of power proposed for the nuclear plant which is composed of twin 1650 MW EDF EPRs.

Financial analysts said that as a result of strong political blow back, the message for Hitachi and Horizon, its UK business unit, after this was clear. Any future strike price would have to be lower, even though the company was taking the same financial risk as EDF at Hinkley Point C.

The strike price eventually offered to Hitachi was £75/Mwh. The lower price would mean over the years billions of pounds less n return on the investment. Hitachi walked away from the project as much for this reason as any other.  Also, the government offered a one-third equity stake which was insufficient as a confident building measure for private investors.

Other reasons include that the government repeatedly delayed a crucial decision regarding going forward to proceed with its Regulated Asset Base (RAB) financial investment model. The plan, which the government has not yet implemented, would have allowed future revenues to be paid upfront to the utility at guaranteed rate.

This Time They Really Mean It

Hitachi said it had now made the decision to abandon the project with no prospects of being involved in any future delivery plan.

When it first suspended the project in 2019, Hitachi kept a small staff at Horizon, its British nuclear subsidiary, and continued to push for planning permission after the government began reviewing a regulated asset base (RAB) funding model.

It limits construction risk for developers by having consumers pay upfront for a new plant through their energy bills. Horizon wanted clarity from the government on whether it could use the RAB model for Wylfa. The answer never came.

  • Horizon said that following Hitachi’s decision it will be ceasing its activities to develop projects at Wylfa Newydd and also at Oldbury-on-Severn in Gloucestershire where it was to have built twin 1350 MW ABWRS.
  • In all Hitachi’s decision will result in the cancellation of 2,700 MW of CO2 emission free power generation.

Swift Reaction Brings a Firestorm of Criticism to the UK Government

Reacting to today’s news, Tom Greatrex, chief executive of the Nuclear Industry Association, said it was disappointing news and underscored the urgent need for progress on new nuclear projects in the UK if net zero carbon emissions is to become a reality.

“Wylfa is probably the best site in the UK for new nuclear capacity, and has strong community and stakeholder support. It is imperative that a way forward is found for the site, to deliver thousands of jobs, hundreds of apprenticeships and millions of pounds of investment into an economic boost for the area while delivering secure, reliable and low-carbon power to underpin the UK’s transition to net zero.”

firestormGMB, the energy union, described the collapse of the project as “utterly predictable” and “the outcome of successive government failures to act decisively around new nuclear, and in particular how it is financed.”

“It’s no coincidence that around the world – almost without exception – it is governments who finance these projects, as they are the lender of last resort when it comes to keeping the lights on,” GMB said.

GMB added it was “bewildered” by the UK government’s de facto position of asking the private sector to shoulder the burden and long lead time of building a $16 billion nuclear power station. GMB called it “a fanciful experiment of trying to get foreign companies or governments to fund our future energy needs.”

The union says the UK needs at least six new nuclear power plants to meet the country’s future energy demands and green targets.

Cameron Gilmour, spokesman for the Sizewell C Consortium said: “This news will have serious ramifications for companies both in Wales and across the UK. The Wylfa nuclear project would have been another important milestone for the UK’s nuclear supply chain and would have created thousands of jobs.

“Unless Sizewell C, a replica of the under-construction Hinkley Point C, is given the go-ahead, there is now a serious risk to the future of the UK’s civil nuclear construction capability and the tens of thousands of jobs that go with it.”

EDF is promoting the advantages of reproducing the design of Hinkley at Sizewell. The 1650 MW EPR design had major cost and schedule overruns in France and Finland, EDF says they UK can benefit from the lessons learned from those mistakes. It also points out that the UK will benefit from transferring high skilled jobs from one site to another.

Boris Johnson’s government did not directly respond to the decision by Hitachi to quit the Wylfa project.

What Ever Happened to Moorside?

(WNN) A group of companies, trade unions and individuals have launched an initiative to develop a Clean Energy Hub centered on a package of nuclear and renewable energy projects at Moorside in Cumbria, north-west England.

The proposal is based on projects including a new 3.2 GW UK EPR plant with links to technologies including renewables and hydrogen production. Several of the companies are involved in the construction of Hinkley Point C, and many are involved in Sizewell C.

The Moorside Clean Energy Hub plans to capitalize on the design and project experience from the Hinkley Point C UK EPR and the follow-on Sizewell C project to develop Moorside.

The hub will link the nuclear plants with other energy technologies such as renewable energy generation, hydrogen production and energy storage. It will explore ways of providing clean heat to industry and could also produce hydrogen to be used as a “green” fuel for local transport and industry.  The consortium said it would also consider small modular reactors and advanced designs for the site.

Moorside, which lies to the north side of the Sellafield site, had been earmarked by the NuGeneration (NuGen) consortium to build a nuclear power plant of up to 3.8 GWe gross capacity using Westinghouse AP1000 reactor technology.

Toshiba, which was to build the AP1000s, withdrew from the nuclear industry. Westinghouse declared bankruptcy after the failure of the V C Summer project in South Carolina and was later sold to a Canadian private equity fund. Although the AP1000 passed the UK Generic Design Assessment in 2017, there is no indication that it has a buyer for this design in the UK.

At one point South Korea entered negotiations with Toshiba to take over the project, but there was no deal.  The UK government squandered an opportunity to put money on the table to make it happen.

The Moorside site itself, which NuGen bought from the UK Nuclear Decommissioning Authority in 2009, remains designated by government for nuclear new build. As of June 2020 no nuclear reactor vendor is slated to build on it.

Rolls Royce to Offer Mid-size Reactor
as a Lifeline for Wylfa Site

(UK Construction Trade Press Reports) Rolls-Royce has floated the prospect of building the first of the next generation of compact nuclear power stations at the Wylfa site in North Wales. Rolls Royce said its power station would be able to operate for 60 years and provide 440MW of electricity, enough to power a city the size of Leeds.

Rolls-Royce, which is leading a consortium including BAM Nuttall and Laing O’Rourke, has said sites at Anglesey and Trawsfynydd could be homes to new small-scale power stations.

What Rolls-Royce says it is doing is taking commercial off the shelf components for light water reactors and bolting them together into a 440 MWe affordable package with a  focus on being competitive in terms of costs. At this size it is larger that the range normally assigned to small modular reactors (SMRs) by the IAEA.  As such it might more accurately be described as a mid-sized PWR.

rollsroyce440mw

Conceptual drawing of a Rolls Royce 440MW PWR plant. Image: Rolls Royce.

At an estimated overnight cost of $5,000/Kw, the Rolls-Royce 440 MWe unit would come in at $2.2 billion. By comparison, the proposed twin 1350 MW ABWRs for the Moorside project, led by by Japan’s Hitachi, had projected costs that some sources estimated had soared into the stratosphere from an initial estimate of $16 billion ($5925/Kw) to over $24 billion ($6,480/Kw).

The consortium calculates it can get the cost of a Rolls Royce nuclear power station producing 440 MWe to about GBP1.75 billion, ($2.29 billion)($5,200/Kw) which means being able to sell electricity at below GBP60/MWh ($78.44/MWh). Hitachi had been offered GBP75/MWh ($98.04)/Mwh) by the UK government for power from Wylfa, but walked away from it.

Challenges and Opportunities Ahead

Challenges ahead include the fact that design for the reactor must complete the complex and expensive Generic Design Assessment by the UK Office for Nuclear Regulation and the Environment Agency. It takes about four years for a new reactor design to complete all the phases of the process

So far four full size nuclear reactors have completed the process including the Westinghouse AP1000, Hitachi ABWR, EDF EPR, and CGN HPR1000 aka Hualong One.

Tom Samson, interim chief executive officer of the UK SMR consortium, said: “The UK SMR consortium’s ambitions for a fleet deployment of clean, cost-effective power plants across the UK remain unchanged and we believe sites such as those at Wylfa, Trawsfynydd and in West Cumbria still have major roles to play.

“Such a program would drive industrial activity to manufacture our modular, factory-built power plants and create thousands of high-skilled jobs, both where the power stations are located and across the UK supply chain.”

By 2050, a full program of 16 power stations (7,700 MW or the equivalent of six 1350 MW ABWRs) could create 40,000 jobs and add £52bn of value to the UK economy, the government added.

Nuclear Energy is Essential to Hydrogen Future – LucidCatalyst

(WNN) Untapped options for clean hydrogen – including the use of advanced modular reactors – can put the world back on the pathway to meeting the Paris climate goals, according to a new report from energy research and consultancy firm LucidCatalyst. (Report – Large PDF file)

The report says the clean energy transition from oil to hydrogen-based fuels could be achieved with a global investment of USD $17 trillion, spent over 30 years from 2020 to 2050

The world can still meet the Paris goals of limiting temperature changes to 1.5-2°C if sufficient, low-cost, clean hydrogen is produced to replace oil and gas in shipping, aviation and industry according to the report.

“If difficult-to-decarbonize sectors continue to be ignored, the world risks experiencing increasingly extreme climate impacts.”

Renewables Can’t Do the Job Alone

The report says the amount of hydrogen required to do this is far more than can be produced with renewables alone. For this reason, a new generation of advanced modular reactors will be required to produce enough climate-neutral fuel to displace the 100 million barrels of oil that are currently consumed around the world each day.

In its report – titled ‘Missing link to a livable climate: How hydrogen-enabled synthetic fuels can help deliver the Paris goals‘ – it says new modelling results show that hydrogen must achieve a target price of USD  $0.90/kg by 2030 to enable broad scale fossil fuel substitution.

Current published projections for renewable-generated hydrogen estimate prices of USD $0.73–USD $1.64 will not be achieved before 2050. New hydrogen production facilities powered by advanced modular reactors could instead deliver at global scale for USD $1.10/kg, with further cost reductions reaching the target price of USD $0.90/kg by 2030.

Hydrogen generations and uses

Hydrogen generation and uses. Image: U.S. Department of Energy

Advanced modular reactors are the only technology that can realistically achieve this low price from electrolysis in the short to medium term according to the report. These technologies and accompanying cost reductions can enabled by a shipyard-based manufacturing and delivery model for advanced reactors. Several developers of advanced reactors are taking this approach to bringing their plants to market.

“Innovative heat sources need to be fully brought into the world’s decarbonization efforts. Therefore, for the near term we are referring to advanced modular reactors, but in the longer term, advanced heat sources could also include fusion and high-temperature geothermal.”

“This transition will not begin without urgent action by governments and other actors to bring down costs and accelerate innovation and deployment,” the report says.

It adds, “This report sets out a pathway to decarbonize a substantial portion of the global energy system, for which there is currently no viable alternative.”

“There is simply no other way to make the numbers add up,” added Kirsty Gogan, LucidCatalyst’s managing director.

“This truly is the missing link we need to maintain a livable climate on this planet.”

Can Hydrogen Save Nuclear Energy?

According to the U.S. Department of Energy, Nuclear power plants can produce hydrogen in a variety of methods that would greatly reduce air emissions while taking advantage of the constant thermal energy and electricity it reliably provides.

Existing nuclear plants could produce high quality steam at lower costs than natural gas boilers and could be used in many industrial processes, including steam-methane reforming.

However, the case for nuclear becomes even more compelling when this high-quality steam is electrolyzed and split into pure hydrogen and oxygen.

A single 1,000 megawatt nuclear reactor could produce more than 200,000 tonnes of hydrogen each year.

Ten nuclear reactors could produce about 2 million tonnes annually or one-fifth of the current hydrogen used in the United States.

This process would allow utilities to produce and sell hydrogen regionally as a commodity in addition to providing clean and reliable electricity to the grid.

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