London – Hitachi Ltd. said Wednesday it is pulling out of a nuclear power plant project in Wales, citing a worsening investment environment, in a blow to Britain’s low-carbon energy policy.
The project in Anglesey had already been suspended for 20 months.
“The investment environment has become increasingly severe due to the impacts of COVID-19,” the Japanese firm said in a statement.
Costs for the project, involving Hitachi subsidiary Horizon Nuclear Power Ltd., increased 1½ times from the original estimate to ¥3 trillion ($28 billion) due to ballooning safety-related costs.
Negotiations with the British government had made little progress in current circumstances, with one source close to Hitachi attributing the stalemate in part to the coronavirus pandemic and the United Kingdom’s exit from the European Union.
The plant aimed to generate nearly three gigawatts, enough to supply around 6 percent of Britain’s electricity needs.
The industrial giant had been waiting for the government’s latest energy strategy, which could potentially include new financing models for the nuclear industry.
But the policy has not yet been published.
The latest decision is a severe blow to efforts by Tokyo to promote infrastructure exports as a key driver of economic growth. Opposition to nuclear power generation remains strong in Japan following the 2011 disaster at the Fukushima No. 1 plant.
Toshiba Corp., another company with large power infrastructure operations, has withdrawn from its U.S. nuclear power business.
The expected withdrawal also comes against a backdrop of concern at Chinese involvement in Britain’s nuclear industry, and strained diplomatic ties between London and Beijing.
Lawmakers succeeded in securing a government change of heart to block Chinese telecoms provider Huawei from the country’s 5G network on security grounds.
They are now asking questions about China General Nuclear Power’s involvement in several projects, including one in partnership with France’s EDF.
The Hinkley Point scheme, in Somerset, western England, is currently the country’s only nuclear project under construction and is due to be completed in 2025.
Britain’s nuclear power plants built in the last century have either closed or are coming to the end of their lifespan.
The U.K. government however wants to maintain the 20 percent of electricity it gets from the nuclear sector, to help meet its pledge to reduce carbon emissions to net zero by 2050 and tackle climate change.