As the industry awaits the decision on the future of Wylfa Newydd nuclear plant, the UK government is set to rethink its nuclear strategy after the failure of other projects such as the NuGen’s Moorside plant.
The board of Hitachi Limited, based in Tokyo, is expected to meet today to determine the future of the project to construct a new nuclear power plant at Wylfa Newydd on Anglesey, in North Wales.
Last week it emerged that works at Wyfla Newydd nuclear plant on Anglesey could be paused as Hitachi seeks extra funding for the project.
Ministers could now accelerate plans to introduce regulated asset base (RAB) financing into nuclear sector projects, which would help boost investor confidence in the sector.
RAB was first developed in the 1990’s for use in projects by Ofwat. Using predictions of costs and profits across the life time of an asesst, the financing allows investors to earn a carefully calculated set return across the time line of the entire project - even before construction has begun.
This type of financing is already being used to construct the Thames Tideway super sewer and was used on Heathrow Terminal 5.
However financing nuclear projects with the RAB model is more complex due to the enviromental and technoically specific risks, as well as the military/ security risks linked to such projects.
In June, business and energy secretary Greg Clark told parliament that the government would be assessing the “viability” of the RAB model for the nuclear projects.
“[Government] will be reviewing the viability of a regulated asset base model as a sustainable funding model based on private finance for future projects beyond Wylfa, which could deliver the Government’s objectives in terms of value for money, fiscal responsibility and decarbonisation,” he said.
The Financial Times has previously reported that EDF, the french infrastructure giant currently working on Hinkely Point C, would be interested in using a RAB finance model for a new reactor at Sizewell.
If Hitachi does walk away, the move could force ministers to quickly pursue a RAB model to try and salvage the planned plant.
Hitachi has already invested £2bn into the Wylfa project with Horizon, the nuclear subsidiary of Hitachi, but its nuclear work makes up just 4% of its overall business.
The Nuclear Decommissioning Authority are still taking return of the failed Moorisde project in Crumbria, which was abandoned by Toshiba in November after their nuclear subsidiary NuGen went bust.
Like what you’ve read? To receive New Civil Engineer’s daily and weekly newsletters click here.
Wylfa doubts could force nuclear finance reform