Moorside – Are Toshiba’s and Engie’s exits mortal blows?
The collapse of the NuGen consortium reflects endemic weaknesses in new nuclear projects across Western Europe, says Nigel Hawkins.
The last few days have seen very contrasting news for UK new nuclear-build.
On the positive front, the first cement pour has taken place at the long-delayed and highly controversial £24 billion 3,200 MW Hinkley Point C plant. It is due to be commissioned in the mid-2020s.
On the negative front, the Moorside new nuclear-build project in Cumbria, which plans to build three AP-1000 Westinghouse plants near the Sellafield nuclear re-processing site, is in deep trouble – the damage may be terminal.
Following a sharp fall in its share price, the Japanese-based Toshiba, with a 60 per cent stake in Moorside, has decided to withdraw from overseas nuclear projects.
Its finances have been drastically undermined by huge losses from US plants being built by its Westinghouse nuclear subsidiary, which it bought from British Nuclear Fuels in 2006.
Westinghouse, an iconic name in US electrical engineering, was originally a major rival to Edison. Its eponymous founder transformed the US electricity industry – but his company is now being pushed into Chapter 11 bankruptcy.
Furthermore, Engie (formerly GDF-Suez), has wasted little time in triggering its legal right to exit the project; it is due to receive c£111 million for its 40 per cent stake.
When the Moorside NuGen consortium was established in 2010, two ‘big six’ power companies, SSE and Iberdrola, were founding shareholders: they both exited some years ago.
There are hopes that South Korea’s highly respected Kepco may step in to fill the breach and save the Moorside project; this may be wishful thinking.
The latest developments affecting UK new nuclear-build are part of an ongoing saga.
After all, ferocious debate has surrounded the Hinkley Point C project for years – with the eye-watering, index-linked £92.50p per MWh Contract for Difference (CfD) for 35 years being particularly controversial.
There are other new nuclear-build projects on the table though at a far less advanced stage.
In Anglesey, another Japanese company, Hitachi - through the Horizon consortium - is planning to build a successor to the Wylfa Magnox plant that is now being decommissioned.
Perhaps not surprisingly, this project has encountered delays; if it were to proceed, it would not be commissioned for almost a decade.
In eastern England, Chinese nuclear investment at both Bradwell and Sizewell has been widely discussed.
State-owned - and Guangdong-based - Chinese General Nuclear (CGN) is very keen to install Chinese nuclear technology at these sites. Importantly, CGN is a minority shareholder in the Hinkley Point C project.
Following Theresa May’s election as Prime Minister, there was a pause before final clearance was given to the Hinkley Point C project, with deep-seated concerns about Chinese security issues reputedly being to the fore.
Although the go-ahead was eventually given, there is no guarantee that a similar decision would be reached for Chinese investment in other nuclear projects.
Elsewhere in Western Europe, nuclear new-build problems seem endemic.
The third-generation plant at Olkiluoto in Finland – due to be a shop-window for new nuclear-build - is both many € billions over budget and many years behind schedule.
EdF’s experience with its first third-generation plant at Flamanville is almost as disastrous as costs soar and delays persist.
In fact, c85 per cent of EdF’s shares are publicly-owned, a very different scenario from other players in the UK electricity supply industry.
Yet, if some of the existing nuclear new-build projects are parked – a likely fate for Moorside – or collapse completely, it may only be the Government that is prepared to step in and rescue them.