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UK Tax-payer to cop huge payments for Wylfa nuclear power project, and costs may still balloon further

Times 3rd June 2018 ,Ministers will this week reverse decades of opposition to investing taxpayer money in nuclear energy by agreeing to bankroll a £15bn-plus power station in Wales. The government will commit to taking a direct stake in the Wylfa plant on Anglesey, planned by the Japanese industrial giant Hitachi, after more than two years of negotiations.

It is understood the government will also provide the vast bulk of the £9bn debt. State equity will slash the cost of borrowing, but leave the taxpayer exposed if costs balloon or the project overruns. It has, though, helped ministers to
negotiate a strike price — a guaranteed payment for the plant’s electricity — of about £77.50 per megawatt hour. The government was determined to achieve a cheaper price than the £92.50 agreed with EDF, which is building the £20bn Hinkley Point power station in Somerset.

It is understood that this week’s heads of terms agreement with Hitachi will refer to “lessons learnt” from Hinkley. That deal was criticised by the National Audit Office for driving up the cost by piling too much risk on EDF. The deal this week has had to overcome opposition from the Treasury and will be a coup for the business secretary Greg Clark, who sees nuclear power as a key pillar of the government’s industrial strategy. Hitachi is believed to be considering increasing the number of reactors at Wylfa from two to four, with a strike price of less than £70, and to be planning a plant in Gloucestershire. Wylfa’s three shareholders — the UK and Japanese governments and Hitachi — will pump in about £6bn of equity on top of the £9bn debt provided largely by UK taxpayers.


June 4, 2018 - Posted by | business and costs, politics, UK

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