Hitachi strikes £700m UK nuclear energy deal

Rekindling the UK’s nuclear future.

Masaharu Hanyu, an executive for Japanese high-tech firm Hitachi, speaks as the
Masaharu Hanyu, an executive for Hitachi, announcing the purchase of Horizon Nuclear Power at a Tokyo press conference, October 30, 2012. Photo: Getty

Hitachi has agreed a £700m deal with German utility giants E.On and RWE to buy Horizon Nuclear Power, injecting a fresh sense of vitality into the UK’s nuclear enlargement plans.

The venture could see between two and three nuclear plants built on existing sites at Oldbury, near Bristol, and Wylfa, North Wales, scheduled to become fully operational in the early 2020s. The 13,000MW reactors are expected to provide power to as many as 14 million homes over the course of 60 years.

Hitachi’s £700m deal is almost double what analysts had expected, blowing a rival bid from America’s Westinghouse Electric clean out of the water.

Each of the two sites will produce roughly 6,000 construction jobs, with a further 1,000 permanent positions at each station once fully operational. Rolls-Royce and Babcock International have signed preliminary contracts to assist on the projects, which should be finalised by late November.

“I warmly welcome Hitachi as a major new player in the UK energy sector”, said Prime Minister David Cameron.

“It will support up to 12,000 jobs during construction and thousands more permanently highly skilled roles once the new power plants are operation, as well as stimulating exciting new industrial investments in the UK’s nuclear supply chain”, he added.

“This is a decades-long, multi-billion pound vote of confidence in the UK that will contribute vital new infrastructure to power our economy”, he declared.

In March 2011, E.On and RWE mothballed Horizon Nuclear Power following Germany’s plan to abandon nuclear power by 2022 in the wake of Japan’s Fukushima disaster. The decision cast a long shadow over the UK’s planned nuclear expansion, with investors reluctant to invest in the sector shrouded in such uncertainty.

However, the recent deal has provided a new lease of life to Britain’s nuclear rejuvenation and the Government’s vision to ensure a long-term, low-carbon energy supply. The deal will also go some way towards reducing Britain’s over-reliance on gas amid the decommissioning of other nuclear plants across the UK.

As gas prices spiral, Energy Secretary Ed Davey, stressed the importance of maintaining a diverse energy supply to prevent soaring energy bills.

“We are having to import far more gas now as the gas in the North Sea declines in volume. That is very expensive”, he said.

“Part of our whole energy policy is to diversify – a more balanced approach – so we are not over-dependent on one fuel supply”.

As one of the only three Western European governments with long-term nuclear power commitments, the UK has set aside roughly £110bn to replace deteriorating plants, with as many as eight new sites scheduled to come online by 2025.