9 Annex 1: Summary of private session
with Hitachi |
6 November 2012
Sir Stephen Gomersall, Group Chairman for Europe,
Hitachi Europe Ltd
- Graham Fagence, Business Development, Hitachi
- 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
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.
Hitachi plan to put the ABWR design into the GDA
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.
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
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
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.
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.