The Japanese multinational company Hitachi has announced the suspension of its GBP 13bn project to build a nuclear plant (Wylfa) set to be operational by 2020 in Wales.
Early last year, negotiations were made regarding plans for public sector fund investment in order to meet rising costs. The UK's Business, Energy & Industrial Strategy Secretary, Greg Clark, said that ‘any deal needs to represent value for money and be the right one for UK consumers and taxpayers. Funding cuts across all government sectors do not come as a shock amidst with the ever-looming uncertainty of Brexit which has resulted in no fixed investment from the government. This would mean a setback of around ‘GBP 2bn of Extraordinary non-technical loss’ for the company, according to Hitachi.
This comes as an unwelcome shock to the Chairman of the Isle of Anglesey County Council, Dylan Rees, who expected the project to drive growth in the local economy of North Wales and create new job opportunities.
Unrest exists on both sides of the debate.
The project's initial go-ahead caused an uproar from protesters. Japan's Prime Minister, a backer of the campaign ‘Safe Nuclear is No Nuclear’, visited the proposed site of Wylfa. On his visit, he stated a clear message of how disastrous the effects could be if there were any malfunctions at the plant. The aftermath of the Fukushima disaster is still a bitter reminder today.
From an insurance perspective, power plants such as these would mean major nuclear liability coverage. Axco reports that there are 'proposed significant increases in the compulsory legal liability insurance for nuclear installations, following the 2004 protocol which amended the Paris Convention on Third Party Liability for Nuclear Energy'.
For the moment, the Wylfa project has been paused, rather than abandoned. We are yet to see if the deal goes ahead.
Right now, however, it seems that possible negative costs outweigh the benefits of this project.
As the sudden pause on the nuclear plant in North Wales demonstrates, change can occur rapidly in any industry, even energy, where decisions take years to make. Stay on top of changes in the non-life insurance market with Axco's insurance market reports.
The future of the planned Wylfa Newydd nuclear power station on Anglesey is shrouded in uncertainty after Hitachi responded to a report that construction would be suspended by saying that “no formal decision” had been taken. https://www.walesonline.co.uk/news/politics/hitachi-to-pull-plug-angleseys-15663299