Much fuss was made when it was announced that Chinese state investors were to become minority shareholders in the new Hinkley Point nuclear power station. But it now seems that the Japanese, not the Chinese, not even the French, will be the main owners of Britain’s new fleet of nuclear plants.
Toshiba today confirmed that it would purchase all of Spanish Iberdrola’s 50 per cent stake in the NuGen company set to build a power station at Moorside in West Cumbria, as well as a further 10 per cent from France’s GDF Suez, making Toshiba the majority shareholder. This follows the 2012 decision by Hitachi to buy the Horizon company planning to build plants at Oldbury and Wylfa.
Of course, while this all serves as a sad reminder that British industry no longer has the ability nor the willingness to build its own nuclear power stations, Toshiba’s decision should serve as a vote of confidence.
At a time when the French, German and Japanese governments are looking to scale back their nuclear industries and a raft of European companies (including British ones) have withdrawn their interest in the UK, the £102m deal shows there are still companies willing to invest heavily in the sector.
Britain’s new nuclear programme is by no means secure. Of the five new power stations planned, only Hinkley Point C has reached an energy “strike price” agreement with the government allowing construction to begin. We saw in the 1980s how grand nuclear plans can be halted when Sizewell B was built but proposals for nine other plants were scrapped.
Of course the situation today is very different. The imperative to cut carbon emissions and the decline of North Sea oil and gas means the UK has much greater motivation to renew its nuclear generation. Even if widespread fracking were to go ahead, there is scant evidence to show it would precipitate a significant fall in gas prices. Nonetheless, each move reassuring us of the viability of the new nuclear programme is to be welcomed.
There are other reasons why the involvement of Toshiba may be good news. The company has confirmed it will use three AP1000 reactors developed by Westinghouse (of which Toshiba has majority ownership), as opposed to the Areva European Pressurised Reactor (EPR) design to be used by EDF at the new Hinkley Point and Sizewell stations.
Add in the Hitachi-GE Advanced Boiling Water Reactors (ABWRs) to be used by Horizon and the UK is set to have a solid mix of nuclear technology, unlike France which relies largely on Pressurised Water Reactors (PWRs) and is now only building EPRs so has a greater exposure to possible generic failure.
This may also benefit attempts to restart Britain’s nuclear supply chain, giving companies access to more international partners and equipping them with a wider range of skills and experiences when it comes to providing reactor components. After Hitachi entered the game, it announced it would build a factory in the UK. Perhaps Toshiba will do the same. Indeed, Britain could become the European base for Japanese nuclear firms, just as it has for Japanese car firms – providing there are enough European customers to make it worthwhile.
What the UK won’t benefit from is economies of scale. The principles of market competition have led us to agree an energy price twice that of the current wholesale rate and twice that paid to French nuclear plants. This only applies to Hinkley C but gives us an indication of the kind of price we can expect to pay across the programme. Having said that, recent analyses have suggested France can expect to pay much more for its nuclear power in future. Perhaps we all have to accept that secure, reliable, carbon-free electricity just doesn’t come cheap.