Plight of US firm, which has technology in about half world’s reactors, deals blow to building of new plants
The Guardian, Wednesday 29 March 2017 09.20 BST
The US bankruptcy filing by nuclear giant Westinghouse has been branded a major blow to the prospects for new atomic power globally.
The nuclear arm of Toshiba proudly states “we are nuclear energy” on its website, a boast underpinned by its technology being in around half the world’s reactors.
But the US firm was humbled on Wednesday when it filed for Chapter 11 bankruptcy protection in a New York court, in a bid to reorganise and limit losses for its Japanese owner.
Westinghouse’s plight stems from a $6.1bn (£4.9bn) writedown because costs have overrun on the two plants it is building in Georgia and South Carolina, the first new US nuclear power stations being built for decades. Toshiba said liabilities for its US unit totalled $9.8bn.
Westinghouse has raised $800m in finance for its reorganisation, $200m of which is from Toshiba.
José Emeterio Gutiérrez, the company’s chief executive officer, said: “We are focused on developing a plan of reorganisation to emerge from Chapter 11 as a stronger company while continuing to be a global nuclear technology leader.”
Toshiba said the writedown could mean net losses for 2016 of 1tn yen (£7.23bn), significantly more than the 390bn yen (£2.82bn) it warned investors to expect in February.
Mycle Schneider, a Paris-based consultant and author of an annual global nuclear report, said that although utilities and companies building nuclear plants had gone bust before, it was new to see a bankrupt nuclear builder.
“If Westinghouse was nuclear energy, where does that leave nuclear energy after the Westinghouse bankruptcy? In the dark. This development illustrates that there is no bright future for nuclear new-build and that new nuclear plants will be irrelevant on the international power market,” he told the Guardian.
The bankruptcy brings some relief for Toshiba, as the US unit will now be off its books. The Japanese corporation has said since that as result of Westinghouse’s troubles, it will no longer build new nuclear plants internationally, but focus on its home market.
Satoshi Tsunakawa, Toshiba’s president, told a Tokyo press conference on Wednesday: “We have all but completely pulled out of the nuclear business overseas.” He added that he felt a “great responsibility” over the financial losses.
Westinghouse and Toshiba said they were “working cooperatively” with the utilities that own its US projects at Plant Vogtle in Georgia and Virgil C Summer in South Carolina, to ensure construction continues. But there are doubts as to whether the plants, which are less than halfway built, will ever be finished.
The Chapter 11 filing also raises question marks for projects around the world. The same reactor design being used in the US plants has also been slated for new power stations in India and the UK. Schneider said those projects were now effectively dead.
Unions and the Labour party called on the UK government to step in and support the proposed Moorside nuclear power station in Cumbria, which would be Europe’s biggest if built. The NuGen consortium behind it is owned 60% by Toshiba and 40% by France’s Engie, whose chief executive has said she is sceptical about new nuclear’s future.
Toshiba, which is yet to make a final investment decision on the project, admitted the supply of the reactors for the plant had been made uncertain by the bankruptcy filing. But it said there was no change in the business climate, and it would still “work to enhance NuGen project’s value”.
NuGen said it would continue developing the site “in a business as usual manner”.
Labour, which recently lost a byelection for the Copeland constituency where Tories attacked party leader Jeremy Corbyn’s perceived lack of support for Moorside, said the government had “dragged its heels” despite Westinghouse’s problems being known for months.
Rebecca Long-Bailey, the shadow business secretary, said: “This announcement throws into doubt the Moorside new nuclear plant that could create 20,000 jobs in Cumbria.”
She continued: “When Westinghouse’s viability was first called into question, Labour said the government should step in to underwrite the company’s investment if the project was at significant risk of collapsing.”
Chris Jukes, a senior organiser at the GMB union, said Moorside was crucial for west Cumbria’s local economy and the UK’s energy needs.
“A collapse of the firm could delay the project or even put its entire future in limbo,” he said.
“It is vital that this project is given the certainty it needs and therefore we are calling on an urgent government announcement to give clear and unambiguous clarity for the short, medium and long term future of Moorside.”
However, Peter Atherton, an analyst at Cornwall Energy, said while the bankruptcy filing was a “big move” globally, it was unlikely to change circumstances much in the UK. “Toshiba is clearly looking to ringfence the US problem. But financing Moorside was always going to be a big problem.”
Another major nuclear builder, South Korea’s Kepco, last week ruled out buying Westinghouse but said it was considering taking a stake in NuGen.
However, anti-nuclear campaigners said that would risk Kepco, which is also building reactors in the UAE, repeating Toshiba’s mistakes.
Ai Kashiwagi, an energy campaigner at Greenpeace Japan, said: “The Moorside reactors are of the same design that sunk Westinghouse’s nuclear business. While Kepco may be desperate to access the UK nuclear market, they would be making the same disastrous mistake that Toshiba made with its purchase of Westinghouse a decade ago.”
Toshiba’s share price rose by 1% after Westinghouse’s bankruptcy filing was announced.