Decision to axe nuclear business deals a potentially fatal blow to plans for a new large-scale nuclear plant in Cumbria

Toshiba has today announced it is to pull out of plans for a new nuclear power plant in Cumbria and wind down its UK nuclear business NuGen, in a move that deals a major blow to the government’s low carbon energy strategy.

Toshiba said it had taken the decision to close down NuGen, taking a Y18.8bn (£125m) hit in the process, after failing to find a buyer for the business over the last 18 months. During that time Toshiba has been hit by writedowns and the eventual bankruptcy of its US nuclear subsidiary, leaving it unable to justify the cost of running NuGen alone.

“After considering the additional costs entailed in continuing to operate NuGen, Toshiba recognises that the economically rational decision is to withdraw from the UK nuclear power plant construction project, and has resolved to take steps to wind up NuGen,” it said in a statement.

The decision deals a potentially fatal blow to plans to build a new nuclear power plant in Cumbria, given that NuGen was the primary developer lined up for the proposed Moorside project. Toshiba was trying to sell NuGen – and the construction rights for Moorside – to South Korean firm Kepco, but talks fell through.

Toshiba said it was “now for the Nuclear Decommissioning Authority as the owner of the site and the government to determine its future”.

The move also deals a further blow to government plans to build a fleet of new large-scale nuclear power plants to replace ageing facilities and provide baseload low-carbon generation.

Without new large scale new nuclear capacity, the UK is likely to need to roll out significantly more renewable energy capacity than is currently planned in order to meet its legally binding climate targets.

Moorside was expected to have provided enough power to meet around seven per cent of UK demand.

A report from the New Nuclear Watch Institute in September warned abandoning new nuclear would push up carbon emissions on the UK and increase the cost of electricity.

But despite the uncertainty for the UK’s energy future some environmental campaigners welcomed the news, seeing it as an opportunity to make a fresh case for more support for wind and solar power.

“The end of the Moorside plan represents a failure of the government’s nuclear gamble,” said Greenpeace UK’s executive director John Sauven. “Their flawed approach to making our economy low carbon has dashed the hopes of prospective workers and businesses in Cumbria that should have been centred around renewable technologies.”

Jonathan Marshall, an analyst at the Energy and Climate Intelligence Unit (ECIU), agreed. “The demise of plans for a new power station at Moorside should be seen as an opportunity, rather than a risk,” he said. “Shifting away from expensive, complicated technology towards cheaper and easier to build renewables gives the UK the opportunity to build an electricity system that will keep bills for homes and businesses down for years to come.”

To date the only new nuclear plant to be approved and financed is the £20bn Hinkley Point C, which is scheduled to be operational in the mid-2020s and is supported by a government-backed price support contract. Talks are also underway between the government and developer Hitachi to push forward the the Wylfa Newydd nuclear project in Wales.

The Department of Business, Energy and Industrial Strategy (BEIS) insisted its broader strategy was not threatened by Toshiba’s “entirely commercial” decision to exit the UK nuclear sector.

“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,” the department said in a statement. “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.”

However, Tom Greatrex, chief executive of the Nuclear Industry Association, urged the government to now explore how the plans for the Moorside site could be revived.

“Toshiba’s announcement today to wind-up NuGen – the nuclear power plant construction project in Cumbria – is sad news for all those involved in the project and for the nuclear sector,” he said. “The Moorside site in Cumbria remains a site designated by government for nuclear new build and has huge local support. It is therefore vital government facilitates the build of new nuclear on the site for the sake of the energy security of the UK and for the local economy in Cumbria. With all but one of the UK’s nuclear power plant due to come offline before 2030, there’s an urgent need for new nuclear to be built quickly, and the Moorside site has a key role to play in this.”