The guaranteed “strike price” for electricity produced by a new nuclear plant in Wales will be around £15 per megawatt hour lower than the deal negotiated for Hinkley Point C, according to people close to the negotiations.
British ministers are expected to announce an agreement for funding the Wylfa Newydd project in Anglesey next month, though this will not include precise details of the government’s stake in the project or the strike price.
Full cost estimates for the development, which are estimated at about £16bn, will not be completed until the end of the year. Hitachi, whose reactor technology will be used at the site, is expected to make a final decision on whether to invest in construction of the plant next year.
On Monday, the board of the Japanese group, which remains divided on the project, agreed to continue negotiating with the UK over the future of the development. The agreement on a tripartite investment structure — under which Hitachi, the UK government and state-backed Japanese entities would become equal investment partners — paved the way for next week’s announcement.
The UK government’s decision to take a direct equity stake in the plant marks a reversal of a previous policy not to commit public funds to the construction of new nuclear reactors. It will allow the project to draw on the government’s ability to access cheap debt, but also expose taxpayers to potential steep costs and high risk. Sources close to the negotiations said the costs for subsequent units at the site would be substantially lower.
The Treasury had resisted the move for months on the basis that taking any equity could mean the entire project being added to the UK government’s balance sheet
The first two units at Wylfa could generate about 2.9GW of electricity, enough to power about 5m homes. Wylfa is being developed by Horizon, a subsidiary of Hitachi. A spokesperson for Horizon declined to comment.
Adam Marshall, chief executive of the British Chambers of Commerce, said: “This is really important. We have been campaigning for new nuclear power stations to be part of the UK’s energy mix; security of supply is very important to the country.
“We have long advocated for the state to use its balance sheet to get critical infrastructure projects off the ground,” he added. “This is sensible from the point of view of energy supply and energy security.”
Reporting by Sylvia Pfeifer, Jim Pickard, Leo Lewis and Kana Inagaki