Toshiba decides to scrap Moorside project
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Formed in 2009, NuGen planned to build a nuclear power plant of up to 3.8 GWe gross capacity at the Moorside site in West Cumbria, using AP1000 nuclear reactor technology provided by Westinghouse. That reactor design completed the UK regulatory assessment process in March 2017. At that time, Toshiba owned Westinghouse, which filed for Chapter 11 protection with US courts the same month.
In July last year, Toshiba became the sole owner of NuGen, after Engie exercised its right to require the Japanese conglomerate to purchase its stake. The following December, Toshiba announced that Korea Electric Power Company (Kepco) had been selected as the preferred bidder for NuGen. Then, in August this year, Toshiba announced Kepco had lost that status, adding it would however continue to negotiate with Kepco, along with other companies, to acquire NuGen.
Economically rational
Toshiba said today that, "notwithstanding negotiations with multiple companies", it was unable to anticipate being able to complete the sale of NuGen during FY2018 (ending 31 March 2019).
"After considering the additional costs entailed in continuing to operate NuGen, Toshiba recognises that the economically rational decision is to withdraw from the UK nuclear power plant construction project and has resolved to take steps to wind up NuGen," it said.
As part of this, Toshiba has also resolved to liquidate Advance Energy UK Limited (AEUL), the special purpose company it established for holding its shares in NuGen.
Toshiba said it will start the winding-up process by 31 January and will follow all UK legal procedures required to bring it to completion.
As a result of winding up NuGen and AEUL, Toshiba expects to record a consolidated loss before tax of about JPY15 billion (USD132 million). This amount is included in Toshiba’s consolidated business results forecasts for FY2018, announced. In addition, Toshiba also expects to record a loss on the valuation of stocks of subsidiaries and affiliates related to AEUL of about JPY3.8 billion. This loss will be eliminated from the consolidated financial statements and there will be no change in consolidated business results, Toshiba said.
NuGen has capital stock worth GBP381,870,010 (about JPY56.7 billion), according to notes included in Toshiba's statement today. NuGen recorded a net loss of JPY5.38 billion in FY2015, JPY6.91 billion FY2016 and JPY10.23 billion FY2017, respectively.
Moorside
In September, NuGen announced it was reducing its team at Moorside from more than 100 to fewer than 40 - leading to speculation the plant's development was in jeopardy. NuGen said today it has retained a team to support the implementation of the winding-up process and will work with Toshiba and its other stakeholders.
"Whilst NuGen will not be taking the project forward, the Moorside site in Cumbria remains a site designated by government for nuclear new build, and it is now for the Nuclear Decommissioning Authority (NDA) as the owner of the site and the government to determine its future," the Manchester-based company said.
NuGen paid tribute to colleagues, its shareholder, Toshiba, and to the other stakeholders, and the "many various friends of the project both in Cumbria and beyond", who have supported its efforts through the development phase and the proposed sale negotiations.
Tom Greatrex, chief executive of the UK's Nuclear Industry Association, said Toshiba's announcement today to wind-up NuGen was "sad news" for all those involved in the project and for the nuclear sector.
"The Moorside site in Cumbria remains a site designated by government for nuclear new build and has huge local support. It is therefore vital [the] government facilitates the build of new nuclear on the site for the sake of the energy security of the UK and for the local economy in Cumbria," Greatrex said. "With all but one of the UK's nuclear power plants due to come offline before 2030, there's an urgent need for new nuclear to be built quickly, and the Moorside site has a key role to play in this."
Vital need
The GMB trade union said a new nuclear power plant in West Cumbria "remains vital" for the UK's future energy security and requires urgent action.
GMB said the NDA "needs to be scrapped as it currently exists", and a "re-tasked" Nuclear Development Agency created to make sure Moorside, and the accompanying creation of thousands of new jobs and apprenticeships, goes ahead. GMB has "long argued" the government should take a stake in the financing of the Moorside plant, which would have provided 7% of the UK’s electricity needs from 2025.
In the 12 months from 7 March 2017, every 1-in-5.6 days was a low wind day (65 days in total), which meant wind turbines in the UK produced less than 10% of their installed and connected capacity for more than half of the day, GMB said. For 341 days in the year, solar output was below 10% of installed capacity for more than half of the day, it added.
Owners
NuGen was originally owned 37.5% each by Iberdrola and GDF Suez of Belgium, and 25% by Scottish & Southern Energy (SSE), with Iberbrolda and GDF Suez becoming 50:50 owners after SSE decided to withdraw from the project in 2011.
The consortium purchased an option on a 190- hectare site to the north of the Sellafield complex from the NDA in 2009. The plot of land and the plant project are called Moorside, which was one of five proposed sites for nuclear new build in the UK, alongside EDF Energy's Hinkley Point C and Sizewell C and Horizon Nuclear Power's Wylfa Newydd and Oldbury B sites.
In December 2013, Iberdrola agreed to sell its 50% stake in the NuGen consortium to Toshiba for GBP85 million. In April 2015, GDF Suez rebranded as Engie, which announced two years later that it planned to transfer its 40% share in NuGen to Toshiba.
