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Wylfa nuclear project, Bechtel, and the inconvenient truths about the costs

Bechtel & Wylfa  NuClear News Sept 18http://www.no2nuclearpower.org.uk/wp/wp-content/uploads/2018/09/NuClearNewsNo110.pdf   Reports in the Japanese press that Bechtel is to withdraw from its key role in building Wylfa Newydd due to concerns over the project’s profitability, and the drastic rise in construction costs, (1) were swiftly denied. (2)

Nevertheless all mention of the joint venture Hitachi set up earlier in the year with Bechtel and JGC Corporation called Menter Newydd, (New Venture in Welsh) –to help deliver the Wylfa Newydd project – seems to have disappeared. The detailed allocation of work between Horizon and Menter Newydd remained to be worked out, but the new joint venture was expected to lead a significant proportion of on-site construction activities. At that time it seemed that Horizon would be the owners of the nuclear plant and Menter Newydd would be the builders.

The Wales Online website from 22nd May 2016 which announced the establishment of Menter Newydd said “Menter Newydd is a joint venture of Hitachi Nuclear Energy Europe, US giant Bechtel Management Company and Japanese firm JGC Corporation (UK) and will be responsible for the construction of Wylfa Newydd, overseen by Horizon Nuclear Power.” (3)

Bechtel now describes itself as a “project management contractor (PMC) to help deliver a new, two-reactor nuclear plant in Wales for Horizon Nuclear Power”: (4) Clearly a downgrading of its role.

And what of the JCG Corporation? Virtually no mention of Wylfa on their website. But a notice of changes of Directors dated 8th February 2018 has Tsuyoshi Iwasaki who was Associate Executive Director Project Director for Wylfa Newydd retiring and becoming simply an “advisor” to nothing specific. (5)

According to Asahi Shimbun on 17th August Bechtel has decided to withdraw from its key role in construction and only offer a consulting service. The article goes on to say that Horizon Nuclear Power, now a subsidiary of Hitachi, will be in charge of the construction while receiving advice from Bechtel and Japanese electric power companies. One Hitachi executive played down the significance of Bechtel’s withdrawal from its role in construction. “It only means that roles of companies will change. The impact to the project is not big,” the executive said

But the newspaper says “…if Horizon replaces Bechtel, it faces the risk that the construction costs will become higher than anticipated. Hitachi is aiming to lower its stake in Horizon from the current 100 percent to less than 50 percent as a condition for the start of construction of the nuclear plant, and so it is asking other companies to invest in Horizon. But if other companies are concerned over Horizon’s risk, they will hesitate to invest in it. As a result, Hitachi will face bigger difficulties in raising funds for construction and proceeding with the project.”

The Daily Post, on the other hand says: “Reports that a US construction giant has withdrawn from building Wylfa Newydd are “categorically untrue” But Asahi Shimbun didn’t say they had withdrawn completely – only that they had downgraded their role from lead constructor to more of a consultancy role.

Horizon made a big deal out of its announcement that it had appointed Bechtel as Project Management Contractor (PMC) claiming that it would mean cheaper nuclear electricity. It also said it had signed further contracts with Hitachi Nuclear Energy Europe and JGC New Energy UK Limited (JGC) to continue to provide support during the project’s development stage. Bechtel, who will have nearly 200 employees embedded within Horizon, will oversee the project management of the power station, together with Horizon.

Duncan Hawthorne, CEO of Horizon Nuclear Power, said: “These world-leading companies bring a wealth of nuclear, engineering and construction expertise to complement our growing organisation and will help us replicate the cost and schedule successes of the previous four ABWR reactors. The UK still needs reliable nuclear power to help transform our energy mix, and we are gearing up to deliver that. “Our first power station will be cheaper than what has gone before and after that, with smart financing, supply chain learnings and no need for first time overheads, future project costs will fall further still.” (7)

People Against Wylfa B (PAWB) commented that Bechtel has obviously come to the conclusion that it would not make financial sense for them to take part in such a huge and extortionately expensive project. There is an apparent difference of opinion between Hitachi and Bechtel about the cost of construction with Bechtel’s estimates being higher. If a company as large as Bechtel is getting cold feet, it will be difficult for Hitachi to engage another company to take their place. One idea mentioned was that Horizon could replace Bechtel to manage the construction. The risk linked to that would be huge since Horizon is only a local subsidiary company to Hitachi without any experience of building anything let alone two monster nuclear reactors. Hitachi also has no experience of building nuclear reactors. Their track record is offering their boiling water reactors for other companies to build. If, as reported Bechtel will stay as a consultant to the project that is very different to being an active building partner.

The Westminster Government and the Welsh Labour Government should wake up to what is very obvious to other countries worldwide that nuclear power is a technology that belongs to the middle of the twentieth century. It is dirty, dangerous and a threat to environmental and human health. There is an international trend now that sees the price of renewable energy technologies coming down. Using these various technologies and a comprehensive energy conservation programme in our homes, public buildings and workplaces is the sensible and progressive way ahead. This would create work immediately – unlike Wylfa B – without the enormous risks, both financial and healthwise. (8)

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September 10, 2018 - Posted by | business and costs, UK

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