Building New Nuclear: the challenges ahead - Energy and Climate Change Contents


9  Annex 1: Summary of private session with Hitachi

6 November 2012

Witnesses:

Sir Stephen Gomersall, Group Chairman for Europe, Hitachi Europe Ltd

  • Graham Fagence, Business Development, Hitachi Europe Ltd
  • Christian Blessing, Sales Director-Europe Region, Hitachi Power Systems America Ltd
  • Ken Cronin, Senior Partner, Kreab Gavin Anderson

Summary of discussion

BACKGROUND TO HITACHI

Hitachi is a global IT and engineering company, concentrating on social infrastructure. It already has manufacturing operations in the UK. For example, it has signed a contract with DfT for intercity trains to be manufactured in the northeast of England.

ACQUISITION OF HORIZON

Sir Stephen noted that Hitachi's acquisition of Horizon was not yet complete.

Hitachi will be bringing its Generation III+ Advanced Boiling Water Reactors (ABWR) which has been reviewed and approved in three different countries. The ABWR reactor has a successful operating history. The UK can benefit from using a proven technology since it would remove first-of-a-kind risks.

The aim is to provide in excess of 7GW in the UK, made up of two to three 1,300MW reactors at each site (Oldbury and Wylfa).

This is a strategic acquisition for Hitachi because the UK has a need for nuclear power as well as a supportive climate, so Hitachi believes this is an excellent market to deploy its technology. It also hopes to use the UK as a hub from which to access other markets in Europe.

Hitachi will be the technology partner (i.e. most of the money for the developments will come from other sources - see below).

Hitachi didn't come forward at an earlier stage because at that time Hitachi lacked some of the expertise needed for developing new projects. But it can now build on the work that has already been done by E.ON and RWE.

REACTOR DESIGN

Hitachi plan to put the ABWR design into the GDA process early.

Sir Robert Smith asked whether ABWRs carried a greater contamination risk and whether this might affect community acceptability.

Christian Blessing argued that BWRs have several features or enhancements designed to improve operational exposures doses compared to other technologies. These improvements include; i) more robust shielding through the addition concrete and steel, ii) more stringent water chemistry, and iii) improved fuel and more robust fuel design which makes BWR fuel bundles less susceptible to leaks compared to other designs.

TIMETABLE

Hitachi hopes that a final investment decision will be made in four or five years' time and to start generating power in the "early part of next decade".

It may be possible to accelerate GDA discussions, meaning it would be concluded in less than four years. This is because ABWRs have already been constructed in other countries, meaning that the licensing process will be based on real experience (unlike some other designs that are currently going through the process).

In Japan the construction period has been less than four years, but it is unlikely that the process will be this fast in the UK (at least initially) because there are differences between the UK and Japan that it will take time to understand. The last nuclear plant in the UK was commissioned 25 years ago. Therefore it will be necessary to bring UK nuclear new build capability up to current practices found in Japan.

The best case scenario would be for a new power station to come online by the end of 2022, but since this will be the first time an ABWR has been built in the UK, it may take longer.

FINANCING AND THE ENERGY BILL

The fact that Hitachi has chosen to make this investment shows confidence in the overall environment for new nuclear in the UK.

No discussions have been held yet about the strike price, but Hitachi has confidence in the openness of the proposals and believes that there will be a fair outcome from the negotiation process. Negotiations will depend on actual costs and more work is needed on this before discussions can start. It could be months or even years before Hitachi is ready to begin negotiations.

Hitachi will need to seek investors for the projects - the majority of the cost (80%) of each new reactor will need to come from other investors. Hitachi is confident that it will be able to attract investors based on its strong track record of delivering new nuclear power stations to date.

DEVELOPING THE SUPPLY CHAIN AND SKILLS

Hitachi has an interest in the successful development of nuclear and sustaining public support. There should be time for potential supply chain organisations to gear up and get the necessary accreditations to benefit from the new projects.

Hitachi is working with Babcock to see what training is already available and what more might be needed. There is a possibility of setting up partnerships between UK and Japanese universities, but it is still early days.

COMMUNITY ENGAGEMENT

Albert Owen noted that relations between Horizon and the local community in Oldbury had historically been poor.

Sir Stephen said that although Hitachi's initial focus would be on the Wylfa site, building up a strong relationship with the community in Oldbury was also very important.


 
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Prepared 4 March 2013