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Hitachi board of management wavers over costs of Wylfa nuclear power plan

FT 27th May 2018 , The board of Japanese industrial giant Hitachi is “very finely
balanced” over the future of a £15bn nuclear power station it is
developing in Wales, as it prepares to meet on Monday in Tokyo for a
critical vote on the project.

On the agenda is the key issue of whether the
scheme should proceed under a proposed “tripartite” shareholding
structure, which would see the UK and Japanese governments take equity
stakes alongside Hitachi. Wylfa is seen as crucial for the future of
Britain’s energy security and also important for UK-Japan trade relations
as Brexit approaches.

An outline agreement setting out the principles of
the arrangement is understood to have been reached between the UK
government and Horizon, the Hitachi subsidiary company developing Wylfa. It
covers the initial two reactors to be built at the site, though there could
eventually be more.

People close to Hitachi said that, less than 24 hours
before the board meeting, it was difficult to predict which way the board
would lean. Just over two-thirds of the board’s members are outside
directors — an unusually high ratio for a Japanese company. While the
vote on the shareholding structure will mark a “critical milestone” for
Horizon, the ultimate fate of the project awaits another key decision,
according to people familiar with the project.

Full cost estimates for the
development will not be completed until the end of 2018, and the formal
agreement to invest in construction of the plant itself is not expected
until next year. That decision will hinge on whether Hitachi is satisfied
on a range of financial considerations, including capital cost and return
on investment. Another key factor is the strike price — the guaranteed
level at which the plant sells electricity — which is still subject to
discussion. The UK government is expected to back a price some £15 per
megawatt hour lower than the £92.50/MWh negotiated for the Hinkley Point C
nuclear plant that is under development by EDF.


May 30, 2018 - Posted by | general

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