Japan to chip in $8.7bn for UK nuclear project
Funding to Hitachi unit seen raising nation's nuclear profile
TOKYO -- Japan will put together an aid package seen totaling 1 trillion yen ($8.7 billion) for a U.K. nuclear power plant project spearheaded by Hitachi, promoting the country's power technology ahead of an anticipated nuclear boom.
The British government has contracted Hitachi unit Horizon Nuclear Power to build and run two nuclear power reactors at a site on the Welsh coast known as Wylfa Newydd. The project at this point is seen costing around 19 billion pounds ($24.1 billion) in all. There has been talk that the U.K. might pay at least 25% of that, with Hitachi shouldering around 10%.
Japan's Finance Minister Taro Aso and Chief Cabinet Secretary Yoshihide Suga are to meet with Aso's U.K. counterpart Philip Hammond on Thursday for talks toward stronger bilateral ties. A time for Hiroshige Seko, Japan's economy, trade and industry minister, and Greg Clark, U.K. business and energy secretary, to meet and announce collaborations in the nuclear field is being negotiated for later this month. Both sides aim to have a firm funding plan in place for the Wylfa project as early as next year.
Japan's government will provide Horizon with loans through the Japan Bank for International Cooperation and the Development Bank of Japan. Nippon Export and Investment Insurance will provide credit insurance, while Japanese and U.K. financial institutions, including Japan's megabanks and HSBC, will be called on to put up additional capital. This aid is seen totaling 1 trillion yen or so.
By signaling strong support for the project, the governments in London and Tokyo aim to make other investors more willing to put their own funds on the line. The hope is that such investment, along with revenue down the road from power generation, will cover the project's full cost.
Tokyo and London are also talking over such matters as prices and a time limit for a fixed-rate power repurchase scheme once the plant goes live, as well as compensation in the case of accidents.
Chance for a comeback
The U.K.'s political transition following its vote at the end of June to leave the European Union is at the root of Japan's unusually bold funding plans. Former Prime Minister David Cameron seemed to favor China as a partner in nuclear power projects, for example signing off on plans to use a Chinese reactor -- the first in an advanced nation -- for a power plant in southeast England.
But Prime Minister Theresa May, who took power following the Brexit vote, saw things differently. Her government in July began an unexpected review of a power project by French utility EDF and state-owned China General Nuclear Power in southern England. While construction was given the go-ahead at the end of September after certain conditions were added to the deal, May appears more concerned than her predecessor about an uptick in the U.K.'s economic reliance on China, giving Japan an opening.
Exporting infrastructure is a key part of efforts by Prime Minister Shinzo Abe's government to stoke Japanese growth. But the country has experienced setbacks in the nuclear field of late. Mitsubishi Heavy Industries was seen as sure to win orders for nuclear reactors in Vietnam, but those plans were recently scrapped, for example.
The International Energy Agency estimates global nuclear power output will climb 60% from the 2013 level by 2030. Building up its record with the U.K. project will help Japan grab more orders, including in developing nations, as demand for new nuclear facilities grows, the government believes.