Greg Clark has signalled a shift in the government’s long-standing block on direct investment in nuclear energy as he announced the next phase of talks on Horizon’s Wylfa Newydd plant.

Following a flurry of press speculation last week in the wake of a meeting of Hitachi’s board in Japan last Monday, the business secretary announced in the House of Commons yesterday evening (4 June) that formal negotiations would now commence on the 2.9GW twin reactor station on the Isle of Anglesey.

Horizon, which is owned by Japanese multi-national Hitachi, announced yesterday that it had submitted a planning application for the north Wales project.

Clark also told MPs the government is considering a recommendation in a National Audit Office report, published last year, that it should take a direct investment in the project.  Hitachi, the Japanese government agencies and other parties would also take stakes.

By helping to underwrite the project, the NAO said the government could reduce the overall project risk with a knock-on impact on the returns investors need to make to justify their involvement.

Clark said the government will be reviewing the viability of this so called “regulated asset base model” for other projects in the nuclear pipeline including the NuGen project at Moorside in Cumbria.

He also rejected criticism that the government should be pouring its support into battery storage instead of nuclear energy.

The business secretary said: “It [storage] is not at the stage where it can offer the reliable baseload power that nuclear, which supplies 20 per cent of the UK’s electricity, offers now.”

Duncan Hawthorne, chief executive officer of Horizon, said Clark’s announcement is “fantastic news”.

He said: “Building on last year’s regulatory acceptance of our tried and tested reactor technology, it shows real momentum behind the project which will bring huge benefits everywhere from Anglesey to Wales and the UK and Japan. Our focus now is to ensure we continue to deliver on our key project milestones as we move towards construction.”

Tom Greatrex, chief executive of the Nuclear Industry Association, said: “The industry particularly welcomes the news of government commitment to consider different funding models, including direct investment, for financing nuclear new build projects.

“This will reduce overall project costs and, in turn, the cost to consumers as we transition to a low carbon electricity system able to meet our future energy challenges.”

Shadow business secretary Rebecca Long-Bailey said the government’s move on nuclear finance was “a surprising shift from the government’s ideological position against government investment in new energy infrastructure.”

Former Liberal Democrat energy and climate change secretary Ed Davey, said: “The government are wrong to be favouring old nuclear technology when recent dramatic cost reductions in renewable power and innovations in storage technology have made alternative low carbon options cheaper, as well as secure and more flexible.

“This money would be much better spent giving the go-ahead to the exciting Swansea Bay tidal lagoon, as part of a long-term programme to harness cheap clean tidal power, to complement wind and solar power.”

The Planning Inspectorate has 28 days to decide whether Horizon’s development consent order application will be accepted for examination, which is expected to take up to 18 months to determine.

Horizon’s reactor has met the UK’s safety standards after completing the UK nuclear regulator’s Generic Design Assessment process last December.