Hitachi nuclear power station: UK tax and bill payer on the hook for billions if delays or accidents occur
According to Nikkei Asian Review this morning some of Hitachi’s outside directors remain concerned about the Wylfa project’s risks. In response, the company plans to insist on safeguards that reduce or eliminate Hitachi’s financial responsibility for accidents at the plant.
More sweeteners from the UK government over the weekend reportedly included an offer to double the level of its previous guarantee on the loans required to fund construction, as well as a possible equity stake from a UK public private consortium. This would see the taxpayer liable for the cost of any delay or technical difficulties that the company encountered, which could run into billions of pounds. Japanese media reports the Development Bank of Japan (DBJ) balked at a government agency’s request to pump 75 billion yen ($688 million) into the project citing risk as a reason for its reluctance.
Despite the UK government’s financial backing, the company is still reluctant to go ahead due to concerns over its financial risk. It is rumoured that if the power station is built, the government will guarantee a price for the electricity of £80 per mega watt hour, which is considerably more than offshore wind, even accounting for additional grid costs like back up power for when the wind doesn’t blow. Greenpeace UK has calculated that this single project would then add an average ‘nuclear tax’ of well over £3 per year to every household electricity bill compared to delivering the same amount of secure, low carbon power through offshore wind.
Doug Parr, Greenpeace Chief Scientist said:
“This deal is looking like a complete rip off for everyone in Britain. Taxpayers and bill payers will be shelling out for a nuclear tax if this power station is built because it’s so much more expensive than renewable energy, which is faster to build, cheaper and cleaner. It does not bode well if the company that owns and builds the nuclear technology doesn’t want to pay for building it, or own the consequences if there is an accident. It’s like buying a new car but the manufacturer saying the brakes might not work and you’ll have to compensate anyone you crash into. Greg Clark needs to come to his senses and realise that this is a terrible deal for everyone except Hitachi. Renewable power can deliver the electricity we need, it just needs a fraction of the political and financial backing that is being given to the nuclear industry.”
Notes to editors:
The cost of well over £3 on household bills of Wylfa was calculated as follows:
Offshore wind price is coming down rapidly and the most recent price is £57.50 per MWh
Accounting for the system cost of variability of output, including occasions where the end doesn’t blow (also called ‘cost of intermittency’) is likely under £10/MWh (see Imperial College research, although more recent updated work by energy consultancy Aurora suggests it is £7/MWh, and these are higher than government assessment in 2016 of £6/MWh)
Thus offshore wind full costs of secure power would be £67.50, £12.50 cheaper than the proposed £80/MWh for Wylfa.
Wylfa, if it works properly (it might not), would generate 21,300,000MWh over a year (2.7 GW at 90% load factor). Meaning the additional cost per year across all energy bills would be £266million
However domestic consumption is only 35.3% of UK total. If the additional costs are spread equally between users (they may not be – more is likely to fall on households) then costs falling on domestic bills will be £93.9million per year. With 27.2 million households in UK the annual average bill increase would be £3.45. Most up to date assessment of intermittency costs would imply annual average bill increase would be £4.28.