Quantcast
Energy
The Wylfa nuclear power station in Anglesey, North Wales. gosport_flyer / Flickr

Is a Wave of UK Public Money About to Enable New Nuclear Plants?

By Joe Sandler Clarke

A reported public financing deal between the UK and Japanese governments for a new nuclear plant in Anglesey, Wales, could set the UK government up to provide state-support for a raft of nuclear projects hit by financial difficulties.

The FT reported on Tuesday that letters had been exchanged between Tokyo and London expressing support for the Wylfa project—which will be built by the Hitachi-owned consortium Horizon.


The FT story followed up a series of reports in Japan suggesting that the Japanese and UK governments had agreed on $20 billion in loans to acquire a stake in Horizon with the help of financial institutions—including an equity stake for the UK government.

Any move to put public money into new nuclear would represent a significant policy shift from the Conservative government, exposing taxpayers to significant risk while potentially lowering the cost of building a new power station.

The news comes as the UK government faces accusations of refusing to intervene over the collapse of Carillion and the East Coast Franchise.

Both the Japanese government and the Treasury refused to confirm or deny speculation when approached by Unearthed.

A spokesperson for the Japanese government told us: "We are aware that this has been reported, but our understanding is that at present there has been no specific decision made."

When asked about the numerous media reports on public financing, a Treasury spokesperson said that "the government is engaged in constructive discussions with a number of new nuclear developers. These discussions are commercially sensitive and it would be inappropriate to share at this time."

Of the UK's much-delayed nuclear program, Horizon is amongst the closest to an investment decision, but there is also speculation around other projects hit by financial difficulties.

There are also reports in Korean media that the Treasury is involved in project finance for the troubled Moorside nuclear plant—including another possible equity stake.

Troubled Projects

It was announced in December that state-owned South Korean firm Kepco is to take over construction of the power station in Cumbria.

Kepco was named as the preferred bidder for the NuGeneration consortium running the project, after its owner Toshiba was forced to sell due to financial problems, including the bankruptcy of its U.S. nuclear subsidiary.

According to an article published in Korea last year, the UK Infrastructure and Project Authority, a branch of the Treasury, worked on a financing structure with the Korean government, with Kepco at its centre.

The website Business Korea stated in October that the Korean government was working with the Infrastructure and Project Authority on a financing plan alongside U.S. and Japanese institutions to enable the company to buy a stake in Moorside.

Before Christmas, the FT reported that the head of Horizon, the Hitachi-owned consortium which hopes to build the plant at Wylfa, Duncan Hawthorne, felt the project needed government backing to get off the ground.

Hawthorne added that Treasury officials were "fully engaged" with Horizon and committed to ensuring that the power station was built at a lower cost than Hinkley Point C.

Antony Froggatt, a senior research fellow in energy at Chatham House, told Unearthed that the Conservatives were shifting their policy because new nuclear plants are unlikely to come online without significant state backing.

"What we're seeing, and this has been the case for the last 5-10 years, is that the Conservatives have gradually been salami slicing away at their pledge to allow the construction of new nuclear, provided that they 'receive no public subsidy'," he said.

"There's been a shift on this because nuclear can't happen without significant government financial support."

Peter McIntosh, acting national officer for energy at the Unite union, which has long pushed for public investment in new nuclear, told Unearthed that the reports of the Wylfa deal were welcome, but urged the state to go further. "Privatization of the energy sector has failed and we would call upon the government to bring the sector back into public ownership," he said.

Public Money

The government has reaffirmed its commitment to building a fleet of new nuclear power stations in recent months, despite concerns over the cost and delivery.

But if it decides to back a nuclear project, it may prove difficult for ministers to avoid offering the same public support to other similar schemes.

Alex Mosson, construction and engineering law specialist at Keystone Law, said it was unlikely that the government would be in legal trouble if it chose to invest in Wylfa and ignored other projects, but he said it could face political difficulties.

"In terms of the legality, the government more or less has free reign to do what it wants within the parameters of its investment requirements. But in terms of politics, it becomes very different, because these deals can be used as leverage. Legally, I couldn't give a definitive answer, as I don't know what the scheme is. But commenting on the industry itself, there will always be a circumstance where one party will try to use another party's leverage to their benefit," he said.

Ultimately, however, nuclear projects will depend on agreements to buy the power they produce—with new subsidies ruled out until 2025 in the Autumn budget.

"The only short-term option the government would have for giving public money to new nuclear would be to take an equity stake," said Froggatt.

Doing so may still not be sufficient to make the projects happen, however.

Tom Burke, chairman and founding director of the environmental group E3G, suggested that there might be something else at play.

"The struggling nuclear industries of Japan, France and Korea are all looking to the UK to rescue them," he argued.

"What they are getting from the government is warm words and long promises. The truth is that there is no room for additional nuclear in Britain's rapidly modernizing electricity supply system. Without power purchase agreements paid for by consumers none of these projects will go ahead however much they reduce their capital cost."

Reposted with permission from our media associate Unearthed.

Show Comments ()

EcoWatch Daily Newsletter

Sponsored
Climate
Neil Young. Takahiro Kyono / Flickr / CC BY 2.0

‘Unfit Leader’: Neil Young Loses Home to Fire, Rips Trump for Insensitive Tweet

Musician Neil Young, who lost his Malibu home to the devastating Woolsey fire, is urging the world to come together to fight climate change—especially since the president of the U.S. seems "unfit" to take care of the problem, as the icon said.

On Sunday, the legendary rocker posted a letter on his website, the Neil Young Archives, blasting Donald Trump's infamous denial of climate science and his Saturday tweet that blamed California's wildfires on "gross mismanagement of the forests" even though most of the fires are burning on federal land.

Keep reading... Show less
Popular
Westend61 / Getty Images

EcoWatch Gratitude Photo Contest: Submit Now!

EcoWatch is pleased to announce its first photo contest! Show us what in nature you are most thankful for this Thanksgiving. Whether you have a love for oceans, animals, or parks, we want to see your best photos that capture what you love about this planet.

Keep reading... Show less
Popular
Pexels

Fight Climate Change in Your Own Garden

By Deonna Anderson

During World War I, Americans were encouraged to do their part in the war effort by planting, fertilizing, harvesting and storing their own fruits and vegetables. The food would go to allies in Europe, where there was a food crisis. These so-called "victory gardens" declined when WWI ended but resurged during World War II. By 1944, nearly 20 million victory gardens produced about 8 million tons of food.

Keep reading... Show less
Business
Jean-Paul Gaultier talks to French model Cindy Bruna in his workshop in Paris on July 1. ALAIN JOCARD / AFP / Getty Images

Jean Paul Gaultier Drops Fur, Calls Industry 'Absolutely Deplorable'

Another top fashion designer has pledged to ditch animal fur.

During a live appearance on the French television channel Bonsoir!, Jean Paul Gaultier said will no longer use the material in his collections.

Keep reading... Show less
Sponsored
Popular
The battlefield of Verdun is part of France's Zone Rouge, cordoned off since the end of WWI. Oeuvre personnelle / Wikimedia Commons

This World War I Battlefield Is a Haunting Reminder of the Environmental Costs of War

World War I ended 100 years ago on Sunday, but 42,000 acres in northeast France serve as a living memorial to the human and environmental costs of war.

The battle of Verdun was the longest continuous conflict in the Great War, and it so devastated the land it took place on that, after the war, the government cordoned it off-limits to human habitation. What was once farmland became the Zone Rouge, or Red Zone, as National Geographic reported.

Keep reading... Show less
Animals
Waves from the Atlantic Ocean crash against a scenic beach on Cape Cod, Massachusetts. This sandy peninsula is a popular summer vacation destination and is also known for its many Great White sharks. Velvetfish / iStock / Getty Images

Cape Cod’s Gray Seal and White Shark Problem Is Anything but Black-and-White

By Jason Bittel

On a sunny Saturday in mid-September, 26-year-old Arthur Medici was boogie-boarding in the waves off Wellfleet, Massachusetts, when a great white shark bit his leg. Despite the efforts of a friend who pulled him ashore and the paramedics who rushed him to the hospital, Medici died from his injuries. It's about as tragic a story as you can imagine: a young life cut short due to a freak run-in with a wild animal.

Keep reading... Show less
Sponsored
Renewable Energy
Max Pixel

Koch Industries Lobbies Against Electric Vehicle Tax Credit

By Dana Drugmand

Koch Industries is calling for the elimination of tax credits for electric vehicles (EVs), all while claiming that it does not oppose plug-in cars and inviting the elimination of oil and gas subsidies that the petroleum conglomerate and its industry peers receive.

Outgoing Nevada Republican Senator Dean Heller introduced a bill in September that would lift the sales cap on electric vehicles eligible for a federal tax credit, and replace the cap with a deadline that would dictate when the credit would start being phased out.

Keep reading... Show less
Pexels

10 Things You Always Wanted to Know About Neonics

By Daniel Raichel

As massive numbers of bees and other pollinators keep dying across the globe, study after study continues to connect these deaths to neonicotinoid pesticides (A.K.A. "neonics"). With the science piling up, and other countries starting to take critical pollinator-saving action, here's a quick primer on all things neonics:

Keep reading... Show less
Sponsored

mail-copy

The best of EcoWatch, right in your inbox. Sign up for our email newsletter!