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UK Considers State Backing for Nuclear

UK government ministers are "wrangling over how to support" new nuclear power plant projects, with some senior members of the Treasury "hostile" to direct state subsidy, according to the Financial Times. Philip Hammond, chancellor of the exchequer, and Greg Clark, business secretary, have both taken part in talks over support for new plants in Anglesey and in Cumbria, the British newspaper says, citing unnamed sources.

Horizon, a 100% subsidiary of Hitachi Ltd, plans to deploy the UK Advanced Boiling Water Reactor at two sites - Wylfa Newydd, which is on the Isle of Anglesey, and Oldbury-on-Severn, in South Gloucestershire. EDF Energy and its partner China General Nuclear (CGN) plan to build two European Pressurised Water reactors at Hinkley Point in Somerset.

NuGen, the UK joint venture between Japan's Toshiba and France's Engie, plans to build a nuclear power plant of up to 3.8 GWe gross capacity at Moorside, in West Cumbria using AP1000 nuclear reactor technology provided by Westinghouse Electric Company, a group company of Toshiba.

The question of how to support UK nuclear power "has been given new urgency by the financial crisis at Toshiba", the Financial Times said.

A source who has attended meetings involving the Treasury and the Department for Business, Energy and Industrial Strategy told the newspaper, "Discussions are moving forward ... But the Treasury is the Treasury. They will always be more cautious".

Another person involved in the process told the newspaper state support would have to be "financially engineered" in a way that avoided adding to public debt. This could still allow the government to buy minority stakes in the projects, or to provide credit guarantees, the newspaper said.

NuGen and Horizon are both privately backed nuclear power plant projects, while EDF and CGN are French and Chinese state-run companies, which have agreed terms with the UK government that included a Contract for Difference (CfD) and the Secretary of State Investor Agreement. The CfD - the ratepayer-backed guaranteed price for electricity generated by Hinkley Point C - was originally agreed in October 2013 and guarantees the plant will get £92.50 per MWh for for its first 35 years of operation.

A spokesman for Horizon said today, "It's no secret we are in discussions with the UK government and have been for some time. These discussions are complex and while they're ongoing it would be premature and inappropriate for us to comment. However, we remain confident in the government's support for nuclear new build and our project."

A spokesman for NuGen declined to comment ahead of a statement from Toshiba tomorrow. Toshiba is expected to put a figure on the precise goodwill write-off related to Westinghouse's $229 million purchase last year of US construction contractor Stone & Webster from Chicago Bridge & Iron.

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