Toshiba’s just one corporation in a slew of nuclear financial crises
Not just Toshiba – the global nuclear industry is in crisis everywhere, Ecologist, Jim Green 3rd February 2017 Global nuclear power capacity grew slightly in 2016, writes Jim Green, but it was more a dead cat bounce than the promised ‘nuclear renaissance’. The collapse of Toshiba, the direct result of its failing nuclear ventures, is indicative of the crisis faced by nuclear contractors and utilities worldwide. Another sign of the industry’s poor outlook: no major commodity had a worse 2016 than uranium.
Recent revelations that nuclear giant Toshiba faces multi-billion dollar losses and write-downs and may rule itself out of future nuclear construction bids around the world have dominated the world’s financial press.
Toshiba was only just recovering from a 2015 accounting scandal in which it padded reported profits by about US$1.3bn over seven years.
The ripple-effects of Toshiba’s latest problems will be many and varied. Japan’s ambitions to develop a large nuclear export business are in tatters.
As recently as last year, Toshiba said it hoped to win 50 contracts to build new nuclear plants in India and China over the next decade. Also up in the air are reactor construction projects being planned in the UK, Turkey, and elsewhere.
Toshiba says it is “re-examining its relationship” with Westinghouse, its struggling US subsidiary. Delays and cost overruns on nuclear construction projects in the US will be expressed as write-downs that could be as high as US$7 billion.
As Toshiba, so the entire nuclear industry
Toshiba’s 2006 acquisition of Westinghouse has turned out to be a “pivotal moment in Toshiba’s decline” according to Bloomberg. Even pro-nuclear commentator Dan Yurman says the looming massive write-down has “doomed” the company’s US nuclear business.
He adds that it “also apparently ends the so-called nuclear renaissance in the US for full size reactors. During 2007-2010 there were more than two dozen applications expected for new reactors, but now only a few licenses have been completed and they do not have any links to near term plans to build the units.”
But it’s not just Toshiba. Other nuclear utilities around the world are also in deep trouble. Their problems were summarised in the July 2016 World Nuclear Industry Status Report:
“Many of the traditional nuclear and fossil fuel based utilities are struggling with a dramatic plunge in wholesale power prices, a shrinking client base, declining power consumption, high debt loads, increasing production costs at aging facilities, and stiff competition, especially from renewables.
- In Europe, energy giants EDF, Engie (France), E.ON, RWE (Germany) and Vattenfall (Sweden), as well as utilities TVO (Finland) and CEZ (Czech Republic), have all been downgraded by credit rating agencies over the past year. All of the utilities registered severe losses on the stock market.
- French utility AREVA has accumulated €10 billion (US$10.9 billion) in losses over the past five years. Share value 95% below 2007 peak value. Standard & Poor’s downgraded AREVA shares to BB+ (‘junk’) in November 2014 and again to BB- in March 2015. The company is to be broken up, with French-state-controlled utility EDF taking a majority stake in the reactor building and maintenance subsidiary AREVA NP will then be opened up to foreign investment. The rescue scheme has not been approved by the European Commission.
- The AREVA rescue scheme could turn out to be highly problematic for EDF as its risk profile expands. EDF struggles with US$41.5 billion debt, downgraded by S&P, shares lost over half of their value in less than a year and 87% compared to their peak value in 2007.
- RWE shares went down by 54% in 2015.
- In Asia, the share value of the largest Japanese utilities TEPCO and Kansai was wiped out in the aftermath of the Fukushima disaster and never recovered. Chinese utility CGN (EDF partner for Hinkley Point C), listed on the Hong Kong stock exchange since December 2014, has lost 60% of its share value since June 2015. The only exception to this trend is the Korean utility KEPCO that operates as a virtual monopoly in a regulated market.
- In the US, the largest nuclear operator Exelon has lost about 60% of its share value compared to its peak value in 2008………..”http://www.theecologist.org/News/news_analysis/2988607/not_just_toshiba_the_global_nuclear_industry_is_in_crisis_everywhere.html
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