Europe’s biggest nuclear construction project now hangs in the balance
The financial fog swirling around the Moorside new-build project in West Cumbria continues to thicken by the day.
The development consortium NuGen must inadvertently have added to the gloom with its recently published statement that:
“NuGen’s shareholders [Toshiba and Engie] are committed to the development of the Moorside project.”
Folks with longish memories will recall an identical statement (though with names changed) coming just a few short weeks before the widely predicted departure from NuGen of Scottish & Southern Energy (SSE) in 2011 and in 2013 when Spain’s Iberdrola also pulled out of the project.
Whether the current consortium partners of Toshiba and Engie will survive NuGen’s kiss of death message remains to be seen, but the omens are not good for NuGen or those who support the development.
For Engie itself, on record last December as “trying to abandon its nuclear projects in Turkey and Great Britain” in order to concentrate on decentralized energy and renewables, is the odds-on favourite to be next through NuGen’s seemingly ever revolving doors.
Is Toshiba’s AP1000 reactor finished?
Toshiba, dubbed as “ailing” by the Japanese media and still suffering the aftershocks of an accounting scandal in 2015 that rocked the corporate world, now has to contend with its wayward and wholly owned subsidiary Westinghouse purchased from British Nuclear Fuels (BNFL) in 2006 and which has now landed its parent with a multi billion dollar loss on reactor building projects.
Selling Westinghouse, or lowering its equity stake in the reactor business is an option currently being considered by Toshiba, as is selling off some profitable Westinghouse segments such as its nuclear fuel business which includes the Springfields site in Lancashire.
With Westinghouse and its AP1000 modular reactors selected for Moorside by NuGen in 2014, the turmoil surrounding the reactor builder is set to further undermine the future prospects for the West Cumbrian development.
Toshiba’s decision on the “corrective measures” it intends to take to sort out its corporate mess will not be published until mid-February, but it is widely reported by the international media that the Corporation will cease taking orders related to the building of nuclear power stations in a move that would effectively mark its withdrawal from the nuclear construction business.
Though it will continue work on the two twin-reactor AP1000 nuclear plants under construction in the United States, Toshiba is reported to be reviewing its investment in Moorside. There is no doubt that Moorside’s future currently hangs precariously in the balance, its survival dependent on whether or not Toshiba pulls the plug on any further involvement in overseas developments.
Should that be the case, NuGen faces the game-changer not only of losing its main consortium shareholder and its Westinghouse subsidiary (with Engie to follow?) but having to find one or more new partners prepared to nail their colours to a failing new build renaissance on a greenfield site acknowledged as being less than optimum for new-build construction and ridiculously remote from where its output of electricity is needed.
Korea’s KEPCO to the rescue?
One such potential partner whose interest in Moorside has been quietly simmering on the back-boiler for the last few years is South Korea’s Korea Electric Power Corp (KEPCO).
In terms of involvement in Moorside, the company appears to have just two options, the first being to take over some of Toshiba’s stake in the development and thereby help finance the project. Such a move however must surely bite the dust if Toshiba does decide in mid-February that it no longer wants any part of Moorside.
The second and only remaing option is for KEPCO to take on the development itself with or without other partners and ditching the US AP1000 reactors in favour of using its own reactor technology such as its Advanced Power Reactor APR1400 – the first of which, Shin Kori 3 in Ulsan, went on line in South Korea only last year having taken eight years to build.
In turning NuGen’s original plan completely on its head, the adoption of KEPCO’s APR1400 at Moorside would automatically put back NuGen’s current but overly-optimistic projection of a Moorside construction start around 2021 by several years as the South Korean reactor undergoes its Generic Design Assessment by the UK’s Regulators. Such a delay may seem a small price to pay by NuGen whose pet project, without the APR1400, would be facing oblivion.
Yet given its recent history, others may take a different view of KEPCO, which is part-owned by the South Korean government.
For like Toshiba, KEPCO is itself still emerging from a major scandal that surfaced in 2012 involving bribery, corruption and faked safety tests for critical nuclear plant equipment which resulted in a prolonged shut-down of a number of nuclear power stations and the jailing of power engineers and parts suppliers.
Or make the taxpayer finance the project upfront?
Without ‘friends like this’, and in the absence of any change of mind by Toshiba, it is difficult to see how else Moorside might be financed in the future, unless the UK Government itself rides to the rescue with taxpayers money.
The suggestion, floated by NuGen to a House of Lords committee just two months ago that some of what it described as non-nuclear elements of the project – the local transport infrastructure and the offshore cooling systems – might qualify for Government support.
After a decade of posturing over its West Cumbrian project, that the private consortium now feels the need for taxpayer support for Moorside underscores the extent of NuGen’s financial woes and highlights the unattractive face of new nuclear build to would-be global investors.
Picking the UK taxpayer pocket to support a technology past its sell-by date wholly undermines the Government’s erstwhile promise that the full costs of developing, constructing and operating new-build reactors would be borne by the developer and is not likely to go unchallenged.
Right on cue however is the GMB union’s view announced today that “the sensible thing is for the Government to step in and guarantee the funding, this will keep Moorside on track and push down the price we will all have to pay for the electricity it will produce.”
In truth, the ulterior motive behind the Union’s support for Moorside as a means of ‘keeping the lights on’ is the rank fear that, without the development – and with Sellafield’s commercial operations soon to end, the decades of West Cumbria’s unhealthy domination by the nuclear industry will be a thing of the past.
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