Nuclear project rescued as Hitachi appoints engineer Babcock to help with delivery


Hitachi has brought the Horizon Nuclear Power project for £696m and appointed engineer Babcock to support the delivery of its new reactors.

The figure for the sale is higher than many commentators had expected.

The value of land and amount spent by its owners, German energy firms Npower and E.ON, developing the project was thought to be around £600m.

But many had expected Horizon to be sold for much less than that after the owners publically announced the intention to sell in March, with fears that the owners may even struggle to find a buyer.

Hiroaki Nakanishi, president of Hitachi, said: “Today starts out 100 year commitment to the UK and its vision to achieve a long-term, secure, low-carbon and affordable energy supply.

“We look forward to sharing Hitachi’s corporate vision and nuclear business policy with the management and employees of Horizon and working harmoniously with UK companies and stakeholders for the delivery of this vital part of Britain’s national infrastructure and the creation of a strong UK nuclear power company.”

Hitachi’s success may mean that it will take longer for construction work to start on its new nuclear plants at Wylfa on the Isle of Anglesey and Oldbury in Gloucestershire than had been planned because it has yet to get approval from the regulator for its reactor designs.

Both the reactor types designed by Areva and Westinghouse that had been planned for the sites under its German owners were already in the process of gaining this approval, which can take years.

Hitachi said it would immediately start the application process.

As well as signing a memorandum of understanding with Babcock the firm also signed one with Rolls Royce to help with the development of the plants.

Energy secretary Ed Davey hailed the decision, saying it is a “huge vote of confidence” in the government’s  energy policy.

Davey told the BBC Radio 4 Today programme this morning that he had not offered the company any guarantees about future energy prices to secure the investment. He said it was the UK’s overall energy strategy which attracted Hitachi.

He said: “We’ve basically told them our energy, with our electricity market reform which is designed to get the most affordable energy as well as low-carbon energy.

“And so they know our policy; they know our policy of no public subsidy for new nuclear. And the fact that they invested £700m, or are investing £700m in new nuclear suggests there’s a huge vote of confidence in that regime.”

The Department of Energy and Climate Change (DECC) said the deal would see the construction of between four and six new nuclear plants to power up to 14 million homes over 60 years, with the creation of up to 6,000 jobs during construction at each site at Wylfa on Anglesey and Oldbury in Gloucestershire, with a further 1,000 permanent jobs at each site once operational.

DECC said about 60% of the value of the first plant was expected to be sourced from within the UK, and more for subsequent plants.  It said Hitachi plans to establish a module assembly facility in the UK.

Scot Parkhurst , energy director at engineer WSP said: “This is long awaited good news - nuclear power plays an import role in supporting the UK’s energy mix and we need to push on with the programme to ensure we have energy security in the future. 

“Although Hitachi will now need to go through the Generic Design Assessment for its plant technology,  which will delay the construction programme further, the acquisition should still  improve confidence in the UK nuclear new build market for both suppliers and investors.”

Government announces new Nuclear Industry Council

Alongside the Hitachi announcement, energy secretary Ed Davey also announced this morning the creation of a new Nuclear Industry Council. 

The Department of Energy and Climate Change (DECC) said the council would play a “strategic role in helping ensure that the UK’s nuclear industry can build on its strengths and develop the new capabilities needed to compete in a competitive global market”.

The council will be chaired jointly by government and industry representatives, with Davey or energy minister John Hayes and business minister Michael Fallon representing the government and Lord Hutton, Chairman of the Nuclear Industry Association, leading the industry side.

DECC said the government and industry were already developing a Nuclear Supply Chain Action Plan, to be published later this year.

DECC said the plan was  is aimed at maximising UK economic activity and growth from the nuclear sector, including employment and business opportunities for the UK supply chain; ensuring the domestic nuclear market provides a platform for export; and raising awareness of nuclear sector opportunities, to identify barriers and help place the supply chain in a stronger position to compete for those opportunities.

NIA chairman John Hutton said: “The new Council symbolises the long-term strategic partnership developing between the UK nuclear industry and the Government.  Through innovation and high-skilled job creation, the nuclear sector has the potential to be a driver of economic growth in the UK over the coming years. 

“Our ambition is for it to be a globally recognised industry, with UK companies seeking and winning opportunities in the domestic and global nuclear markets.”