Hitachi Abandons $26 Billion Nuclear Power Project in U.K.

Stephen Stapczynski, Bloomberg News

The Wylfa nuclear power station in Bangor, Wales. , Photographer: Christopher Furlong/Getty Images

(Bloomberg) --

Hitachi Ltd. exited a long-planned U.K. nuclear power plant, the latest blow to the atomic energy industry as it struggles to compete globally with cheaper energy sources.

The Japanese company announced Wednesday that it decided to withdraw from the Wylfa power project in Wales, citing a worsening investment environment due to the Covid-19 pandemic. Work has been suspended on the 20 billion-pound ($26 billion) venture since January 2019 after the company failed to reach a financing agreement with the U.K. government.

The decision is the latest setback for nuclear’s revival, which supporters promote as the carbon-free solution for reliable power at a time of growing climate change concerns. With cost overruns and cheaper competition stifling projects and developers in Japan, the U.S. and the U.K., China is emerging as a leader of developing, building and promoting reactors at home and abroad.

The U.K. was one of a handful of developed countries still building nuclear reactors, with the government putting them at the middle of an effort to attract billions of pounds of investment in new power plants and create thousands of jobs. However, financing these expensive infrastructure projects has become a hurdle, especially in the face of cheaper competition from natural gas and renewables.

France’s Electricite de France SA is the only company building a nuclear plant in Britain and is awaiting the government’s plan on how it can help finance its second new station, known as Sizewell C.

Planned U.K. nuclear power projects located at Wylfa, Oldbury and Moorside have been suspended since Hitachi and Toshiba Corp. were unable to secure private financing or partnerships. Over the last decade, Japan’s manufacturers have been trying to spearhead nuclear projects around the world in a bid to supply their own reactor technology and support flagging sales, but the risk of rising costs, safety concerns and stiffer competition has led to nearly all being scrapped.

Prospects for the Wylfa plant were looking slightly better last month when Horizon Nuclear Power Ltd., Hitachi’s subsidiary developing the project, said it was engaged with the U.K. government on reviving the project. The government is expected to give some communication on how it will finance new nuclear projects in its energy white paper next month.

Hitachi bought Horizon from Germany’s two largest utilities for 697 million pounds ($894 million) in 2012 with the backing of the U.K. government.