LONDON (Reuters) - The future of Britain’s new Moorside nuclear plant was thrown into doubt on Tuesday after Japan’s Toshiba Corp (6502.T), which is developing the project with France’s Engie (ENGIE.PA), said it planned to pull out of the construction work.
Toshiba, which earlier delayed reporting its earnings, posted a $6.3 billion (£5 billion) hit to its U.S. nuclear unit, Westinghouse.
“Toshiba will consider participating in the (Moorside) project without taking on any risk from carrying out actual construction work,” it said in a presentation to investors.
Britain needs to invest in new infrastructure to replace ageing coal and nuclear plants set to close in the 2020s, but has struggled to get large projects built, especially nuclear, due to the costs involved.
EDF’s (EDF.PA) 18 billion pound Hinkley Point C nuclear project in southwest England got the final go-ahead in 2016 after several years of delay, but only after securing backing from the French government.
“It’s a pretty challenging time and it’s difficult anyway to work out how to make nuclear projects financeable,” said Chris Lewis, head of UK energy infrastructure at consultancy EY, who has previously advised France’s EDF on Hinkley Point.
“The government needs to look at the risk-sharing agreement for the contracts. There needs to be more clarity on what the product designers are willing to do in order to attract a developer to operate or a financial developer,” he said.
Engie said on Tuesday it was still looking for partners willing to share the risk of investing in the Moorside project.
Business and energy minister Greg Clark said the government is committed to nuclear as an important part of Britain’s energy mix.
“The UK is one of the most attractive countries to invest in new nuclear and we continue to work closely with partners to see Moorside built,” he said.
NuGen, the joint venture developing the plant, said on Tuesday Toshiba “remains committed to developing NuGen’s Moorside Project”, and that the venture “will continue to progress plans to develop (the project)”.
NuGen plans to build three nuclear reactors at the Moorside site on the coast of Cumbria, northwest England, using Westinghouse technology currently being assessed by Britain’s nuclear regulator.
The three reactors would have a total generating capacity of up to 3.8 gigawatts, covering around 7 percent of Britain’s electricity demand.
Earlier this month, sources said Toshiba planned to exit the $15-20 billion project. Last year, the company was said to be in talks with Korea Electric Power Corp (KEPCO) about buying all or part of its stake in NuGen..
Toshiba said NuGen’s fixed asset balance was worth 210 million pounds.
Unite, Britain’s largest trade union, called on the government to do more to safeguard the future of new power projects such as Moorside.
“It is the duty of the government, not the private sector, to ensure that UK energy is safe and secure and that means it must act to bring our new power stations on stream,” it said in a statement.($1 = 0.8023 pounds)
Additional reporting by Geert De Clercq in Paris; Editing by Dale Hudson and Jason Neely