Hitachi Keeps Faith in U.K. Nuclear Plan as Green Costs Drop

  • Horizon says intermittent renewables will need nuclear backup
  • British ownership restrictions on nuclear seen as reasonable

Hitachi Ltd.’s U.K. nuclear unit is sticking with its “aggressive” plan to build at least four reactors in the U.K. even as wind, solar and battery technology costs keep falling.

Renewable energy still needs to be complemented by round-the-clock output of nuclear power for periods when the wind stops blowing and during the night, Duncan Hawthorne, chief executive officer of Horizon Nuclear Power Ltd. said in an interview in London. New nuclear plants too can be built faster because designs have been simplified, resulting in “more competitive” electricity over time, he said.

“I refer to nuclear as being the elephant,” said Hawthorne, who joined the Gloucester, England-based company in May and worked previously at Canada’s Bruce Power LP. “We are capable of being there all the time. We’re steady but we can’t maneuver very much.”

Horizon aims to benefit from a generation shift in the U.K. nuclear industry as current reactors are coming to the end of their lives. On Thursday, the nation approved Electricite de France SA’s plan to build two reactors for 18 billion pounds ($24 billion) in southwest England. Meanwhile, utilities are bidding to build European offshore wind farms at one third of the cost only a year ago, according to Bloomberg New Energy Finance.

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The U.K. government has guaranteed EDF a rate of 92.50 pounds ($122) a megawatt-hour for Hinkley’s electricity for as long as 35 years. That’s more than double current market prices and also about 80 percent higher than Vattenfall AB’s winning tender this week to build two offshore wind farms in the Danish North Sea.

“I encourage wind and solar to continue to innovate and get more competitive,” Hawthorne said. “But I don’t think that’s instead of nuclear, it’s as well as nuclear.”

Existing Sites

Hitachi in October 2012 agreed to buy Horizon and plans reactors at Wylfa in northwest Wales and Oldbury in western England. Both are already existing sites.

The U.K. Office for Nuclear Regulation is considering the company’s plans for adapting Hitachi’s Advanced Boiling Water Reactor design to local conditions at Wylfa, according to the agency’s website. Horizon is expected to apply for its license in the first quarter of next year, ONR said.

The Hinkley Point decision probably won’t change Horizon’s timetable, which is to complete the first Wylfa unit by 2025, Hawthorne said. “The truth is, these are aggressive build programs. There’s no question,” he said.

The government will take a “special share” in all future nuclear projects, giving it power to block changes in ownership that could impinge on national security, it said when approving Hinkley. To help shoulder the construction costs, EDF convinced China General Nuclear Power Corp. to take a 34 percent stake in the project.

The rule change might limit finance options for some projects, “depending on where you thought you were going to raise your money from,” Hawthorne said. “I don’t think it’s a problem for us. These controls are not at all unreasonable.”

Horizon sees the additional scrutiny of the EDF plan as project specific. “Obviously we have to walk before we can run, but if we were only planning to build two units we wouldn’t be in the U.K.,” Hawthorne said. “We’ve come to build a fleet and so that’s our intention.”

(An earlier version of this story corrected the name of Horizon Nuclear Power.)

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