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Business

Japan Atomic Power looks to operate reactors abroad with US partner

Teamwork seen as crucial in global nuclear plant business

Executive officer Masaharu Hanyu announcing Hitachi's acquisition of English nuclear power company Horizon.

TOKYO -- Japan Atomic Power will form a joint venture with American energy provider Exelon to snag orders overseas for operating and maintaining nuclear power plants, with the first involving a Hitachi-led project in the U.K.

The new company will be established as early as Thursday. The partners will each take a 50% stake in the joint venture, capitalized at 10 million yen ($91,500). The headquarters will be in Japan, with the president coming from Japan Atomic Power. Employees will come from both companies.

Exelon operates 23 nuclear power plants in the U.S. and knows how to run these facilities efficiently. The joint venture will combine the companies' expertise in order to optimize operations and educate employees. The venture will initially make consulting its core business but will also participate in running the plants.

The alliance's first project is a nuclear power plant in Anglesey, Wales, to be built by Hitachi subsidiary Horizon Nuclear Power. Hitachi will supply two of its advanced boiling water reactors to the plant, which it hopes will be operational in the early 2020s. Horizon announced its application for construction and operation to British authorities on April 5 and plans to begin construction in the second half of 2019.

Looking for know-how

Hitachi wants to rapidly expand its nuclear energy business and the Anglesey project is at the core of that effort. However, where the company has mechanical knowledge it lacks know-how on the operational side.

That is where Japan Atomic Power and Exelon come in. With their cooperation the project can proceed more smoothly through an integrated order system encompassing equipment manufacturing and operations. Japan Atomic Power has already supported Hitachi on preparing the application for the Anglesey plant and will expand its services to operation and maintenance through the joint venture.

However, Japan Atomic Power is not alone. Competitors from Russia, China and Japan are also winning orders that include construction and operation of nuclear power plants. These companies have realized that there are only a limited number of countries with domestic corporations knowledgeable enough to run a nuclear facility. In the United Arab Emirates, a Korean consortium that includes public utility Korea Electric Power won a contract to build and operate a nuclear power plant.

On the other hand, Japanese nuclear exporters have had difficulty securing operators for their facilities. In Turkey, a planned nuclear plant is to be built by Mitsubishi Heavy Industries and managed by French power company Engie.

Hitachi is currently the only Japanese company with a new order. If the British facility is realized it will mark the first time a Japanese power company operates a nuclear power plant abroad.

Overseas expansion has become indispensable for Japanese nuclear power companies as the bulk of domestic reactors remain offline since the 2011 meltdown at Tokyo Electric Power Co. Holding's Fukushima Daiichi nuclear plant. Japan Atomic Power's two nuclear plants in Ibaraki Prefecture and Fukui Prefecture have been shut down with no timeline for restarting. The company has looked for a means of survival in overseas development but has come up short with only small consulting projects.

A disaster's far-reaching fallout

The Japanese government had figured nuclear energy would play a main role in its push to increase infrastructure exports, but the Fukushima disaster sent costs skyrocketing as countries around the world enhanced safety standards and backed out of projects.

In 2016, Vietnam completely withdrew from an order given to Japan and Russia for the country's first nuclear power plant, which it planned to have operational as soon as 2028. More recently, Toshiba's troubles highlight the increasing difficulties posed by higher-than-expected costs in the nuclear energy business.

Against these odds, Hitachi and Japan Atomic Power are setting out for success overseas.

(Nikkei)

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