Wylfa B nuclear plant: firms drop £8bn joint project plans

The German-owned companies blamed the global economic crisis

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Two power firms have shelved £8bn plans to build a new nuclear power station on Anglesey, casting doubt on thousands of jobs.

E.ON and RWE npower made the decision on Wylfa B, intended to operate from 2025, after a strategic review.

They are looking for a new owner for Horizon Nuclear Power, the joint firm to develop the plant.

The first minister said it was disappointing but there was "significant interest" in the site.

The German-owned companies blamed the global economic crisis, developments in the nuclear industry in Germany and what they called the "significant ongoing costs" of running the Horizon joint venture for the decision.

Volker Beckers, chief executive of RWE npower said: "It is because of the strength of support for our development work, particularly on the Island of Anglesey, that we continue to believe that nuclear power has an important role to play in the UK's future energy mix.

"We are therefore looking to ensure that work on development, including grid connection, can be taken up quickly by other potential investors."

Analysis

The UK government, as well as the Welsh government, are backing a second nuclear power station on Anglesey, especially with the expectation of thousands of new jobs.

Horizon is the company behind plans to build new nuclear power stations at Oldbury and Wylfa.

We had been waiting for an announcement on new nuclear reactors for Wylfa - we were expecting confirmation this month - it didn't come. Instead we have this bombshell.

But not everyone will be dismayed by today's events. A local protest group, People Against Wylfa B, say more and more Anglesey residents question the safety and viability of nuclear power.

There's quite a lot of history here - not least the Fukushima disaster in Japan. It's worth remembering the German government fairly quickly decided there would not be any support for a new nuclear build.

Both companies are based in Germany and there are quite a lot of risks a year on from Fukushima - in terms of a market risk, a cost risk, a construction risk, and a political risk.

It's worth remembering there are two nuclear power plants being built in Europe at the moment - one in Finland and in France. Both are behind schedule, and both have run into considerable overspends.

Horizon had planned up to 6,000 megawatts of new nuclear plants in Britain, which they saw as more friendly to nuclear energy than other countries.

But the parent companies had been indicating recently that they were concerned about possible cost overruns as seen at other nuclear projects in Europe.

The Welsh government spokesperson said: "The first minister has made it clear that Anglesey remains the best option in the UK for a nuclear development.

"There is live and significant interest in the site, and the first minister has asked for the full support of the UK Government as we work with Horizon to deliver this investment and secure jobs for workers at Wylfa in the future."

Labour Ynys Mon MP Albert Owen said it was a "massive blow" to the community, regional economy and the energy industry.

"Horizon has made it clear that this was a strategic decision taken for strategic reasons in Germany," he said.

"The site at Wylfa remains the best option for nuclear development and I shall be working with Horizon, the local, Welsh and UK governments to explore every avenue to find an alternative investment to secure jobs at Wylfa that benefits Anglesey."

Plaid Cymru Anglesey AM Ieuan Wyn Jones said he would also be working in the efforts to secure another company to take the project forward.

"This is extremely disappointing news for Anglesey, given that the project had the potential to provide hundreds of good quality jobs for local people and opportunities for local companies in the new build phase," he said.

Anglesey council said it remained "absolutely committed to securing new investment and other energy generation schemes".

Conservative Welsh Secretary Cheryl Gillan was also disappointed but said Anglesey's 50 years of experience in the nuclear industry gave her confidence the Wylfa site will be attractive to other investors. ‪ ‪

"I have spoken to RWE on the rationale for this commercial decision, and I plan to meet them at the earliest opportunity," she said.

Sasha Davies, director of the Anglesey Energy Island Programme, gave her reaction to the news

North Wales Liberal Democrat AM Aled Roberts said the island had been planning its economic future around the power station.

"A lot of their economic development policies are actually based on the whole concept of the energy island," he said.

But groups including People Against Wylfa B (Pawb) who opposed the development have welcomed the decision.

Horizon Nuclear Power had hoped construction of the £8bn project would start towards the end of 2012.

It had been developing options for two to three new reactors next to the existing Magnox station, which had been given permission to operate until 2014.

Wylfa B has been seen as promising an economic lifeline to the people of Anglesey.

According to the proposals, about 5,000 construction jobs would be created while the plant is built, and between 800 and 1,000 people would be employed in the station from 2020.

In March 2011 Horizon said it needed to "take stock" of its plans following the Japanese earthquake and tsunami.

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