Almost seven years ago the NuGeneration (NuGen) consortium was officially established. Then consisting of France’s Engie (formerly GDF Suez), Spain’s Iberdrola and UK’s Scottish & Southern Electricity (SSE), the consortium’s plan was to make a start on its Moorside triple AP1000 reactor site in 2014. Engie’s decision this week to sell its stake in the project sees the exit of the last founding member of that original consortium, leaving Japanese conglomerate Toshiba as Moorside’s only shareholder and leaving the 2014 start date premature by at least a decade.
Engie’s doubts on remaining part of Nugen were widely trailed in the media last year. The filing for bankruptcy of Toshiba’s subsidiary Westinghouse – deemed as ‘an event of default’ provided the contractual excuse the French company needed to play its ‘get out of jail’ card in order to off-load its 40% shareholding in Moorside and concentrate on energy decentralisation, district heating schemes and renewables. Citing what it saw as the ‘significant challenges’ NuGen is facing at Moorside, Engie will be paid an estimated $139M by Toshiba for the 40% shareholding.
Toshiba, who only bought into the Moorside project in late 2013 and currently fighting for its own financial survival after the bankruptcy of its nuclear arm Westinghouse, now finds itself in what many believe to be an untenable position as NuGen’s sole shareholder. For even before the bankruptcy, when it owned 60% only of the shares, Toshiba had announced that it was seeking to offload that shareholding and, whilst remaining with NuGen temporarily, would no longer play any part in the construction of Moorside. As talks with potential investors including South Korea’s KEPCO have so far drawn a blank, Toshiba now faces finding a buyer for its 100% shareholding – a daunting task given the increasing reluctance of investors to risk involvement in a faltering nuclear new-build renaissance and its exorbitant costs and runaway timetables.
Irrespective of its future ownership, the updated 2020 start of construction of the first of three AP1000 reactors is already behind schedule. Despite the recent and hasty approval of the AP1000 reactor design by the UK Regulators, NuGen’s target date for submitting its crucial Development Consent Order (DCO) for Moorside in the second Quarter of 2017 has already bitten the dust – with NuGen confirming to CORE at the end of March that it currently has no new date in mind for the submission that will kick-start the pre-construction phase of the development.
The delay which insiders believe will see the DCO submission pushed back to the end of 2017 at the earliest, with a subsequent knock-on effect on NuGen’s vital investment decision scheduled for late 2018, stems partly from calls last year by some local authorities and CORE for a further round of public consultation to be held on the development. Whilst NuGen considers its options on further consultation – to atone for the lack of detail provided in last summer’s Stage 2 public consultation exercise – the possibility of further consultation has recently been flagged up by NuGen to the Planning Inspectorate.
The ‘significant challenges’ cited by Engie for Moorside may include such planning hurdles but they will also feature the AP1000 reactors themselves and the inability of Westinghouse to build the high specification lego-style reactors modules to time and cost in the USA and China – a failure that has not only brought Westinghouse to bankruptcy and Toshiba close to financial meltdown but will also raise major doubts with potential investors as to how the untried and untested reactor design can be reliably implanted at Moorside.
Whilst South Korea’s KEPCO may well be tempted to gain a new-build foothold in the UK by taking over NuGen lock, stock and barrel from Toshiba, it appears unlikely that in making such a significant investment it would be willing to nail it’s colours to the problematic AP1000 reactor rather than deploy its own APR1400 reactor which at least has some operational track record in South Korea. The use of the APR1400 at Moorside would put back the development by a further four to five years whilst the South Korean reactor is put through its Generic Design Assessment by UK Regulators.
For its part the UK Government, increasingly referred to as major stakeholder in the project – a sign perhaps that it is being set up to play a financial role in Moorside – is actively seeking new investment on behalf of NuGen, with encouragement from the GMB and other trades unions for the input of UK taxpayers money to save the development from further delay or even abandonment. This despite the Government’s public assurances in 2006 that ‘it will be for the private sector to initiate, fund, construct and operate new nuclear plants’.