The £10bn Moorside nuclear plant has been thrown into doubt after Toshiba announced it is winding up the NuGen business developing the project, having failed to secure a buyer.
The Japanese giant took the decision after 18 months of negotiations failed to find new owners for the Cumbrian scheme, a deal with Korean energy firm Kepco having fallen through in August this year.
In a statement, Toshiba said: “After considering the additional costs entailed in continuing to operate NuGen, Toshiba recognises that the economically rational decision is to withdraw from the project.”
NuGen’s winding-up process will begin in January and be completed by the end of March. The developer’s current headcount of 32 will be gradually reduced as the process progresses, a NuGen spokesman confirmed to CN.
Moorside’s site will be handed over to the Nuclear Decommissioning Authority, with the government issuing a statement reaffirming its commitment to new nuclear.
The Department for Business, Energy and Industrial Statragy (BEIS) said Toshiba had “faced a difficult decision in ending their involvement in new nuclear projects outside of Japan in light of their well-known financial challenges”.
Toshiba posted an $8.4bn loss for the year to March 2017, driven by a $6.3bn writedown of US nuclear-build business CB&I Stone & Webster.
The Japanese firm had acquired CB&I Stone & Webster through its US subsidiary Westinghouse Electric in 2015.
Westinghouse filed for bankruptcy in March 2017 following the writedowns.
The following month, Moorside co-developer Engie triggered a contract clause to sell its 40 per cent stake to Toshiba’s subsidiary NuGen, forcing the Japanese company to pay $138.5m for the shares.
Toshiba launched a review of the £10bn project in May 2017 and in December that year confirmed that South Korean nuclear giant Kepco had been named preferred bidder to take over the scheme.
However, in August it was announced that the Japanese developer had begun looking at alternative options after negotiations with Kepco failed to reach a conclusion.
The protracted talks also forced NuGen to restructure its business.
In September it was revealed that the developer had halved its headcount from 100 to fewer than 40 due to the delays in securing a buyer.
NuGen will now be wound up, with Toshiba stating that it expected to suffer a 15bn yen (£100m) consolidated pre-tax loss as a result.
In its statement, NuGen said: “The announcement comes after 18 months of negotiations with a range of potential new owners.
“Unfortunately, it has not been possible to successfully conclude those negotiations.
“NuGen has retained a team to support the implementation of a winding-up process and will work with Toshiba and its other stakeholders.
“The Moorside site in Cumbria remains a site designated by government for nuclear new build, and it is now for the Nuclear Decommissioning Authority as the owner of the site and the government to determine its future.”
A BEIS spokeswoman said: “We understand that Toshiba have faced a difficult decision in ending their involvement in new nuclear projects outside of Japan in light of their well-known financial challenges.
“All proposed new nuclear projects in the UK are led by private sector developers and while the government has engaged regularly with the companies involved, this is entirely a commercial decision for Toshiba.
“Nuclear has an important role to play as part of the UK’s diverse energy mix as we transition to a low-carbon economy, but in each case projects must provide value for money for consumers and taxpayers.
“This government remains committed to new nuclear through the Industrial Strategy Nuclear Sector Deal.”
More to follow