Hitachi U.K. Atomic-Power Project Agrees on State Loan Guarantee

Hitachi Ltd. gained access to a U.K. loan guarantee to build two nuclear reactors in Wales as the government promotes a new generation of atomic-power projects.

Horizon Nuclear Power, Tokyo-based Hitachi’s U.K. atomic unit, plans reactors at Wylfa in North Wales totaling at least 2,700 megawatts, sufficient to supply about 3 million homes, it said today in a statement. The guarantee will support financing, subject to due diligence and ministerial approval, the Treasury said in a separate statement on its infrastructure plans.

Renewing the nuclear industry is central to Prime Minister David Cameron’s plans for generating low-carbon power as all but one of Britain’s atomic plants are due to close by 2023. The accord follows an agreement by the U.K. for a 35-year contract with Electricite de France SA for power from reactors it’s planning at Hinkley Point in southwest England that included support from the Treasury’s loan guarantee program.

“Today’s offer of a U.K. guarantee is sure to be viewed by international investors, especially in China and Japan, as a sign that Britain is well and truly one of the most attractive European investment environments,” George Borovas, head of international nuclear projects at law firm Pillsbury Winthrop Shaw Pittman LLP, said in an e-mailed statement.

The support will help attract debt and equity for the Wylfa venture, scheduled to generate power in the first half of the 2020s, Hitachi said. Chancellor of the Exchequer George Osborne outlined plans last year to spur infrastructure spending with a 40 billion-pound ($65 billion) loan guarantee initiative.

New Infrastructure

Hitachi and Horizon expect to get project licenses and approvals by 2018, with the investment decision to follow. Hitachi agreed to buy Horizon from German utilities RWE AG and EON SE in October 2012 for 696 million pounds.

“Nuclear must be a part of the future energy mix given our long-term need for reliable low-carbon electricity which is also affordable for the consumer,” Horizon Chief Operating Officer Alan Raymant said in the statement.

The U.K. infrastructure program revised today also includes plans to study bringing private capital into Britain’s Green Investment Bank, set up to spur low-carbon projects. It will advance plans to convert government car fleets to electric, investing 5 million pounds in a pilot program from 2014 to 2015.

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