On 14 February, Japanese technology firm Toshiba Corporation announced a USD6.3 billion write-down on its U.S. nuclear business. Such massive losses threatened to bankrupt the 141-year-old company and are emblematic of the problems faced by the global civil nuclear industry.
Toshiba’s problems began with the 2006 purchase of Westinghouse Electric Company, a U.S. nuclear technology company. The deal, which made Toshiba one of the nuclear industry’s principal players, was based on a wave of optimism within the sector due to rising fossil fuel prices. This model was changed, likely for generations, by the 2011 Fukushima reactor disaster in Japan which undermined much of the global nuclear industry within the space of a few days.
Post-Fukushima operational and technical issues started piling up for Toshiba. Tightening safety regulations made building nuclear plants more expensive, while Toshiba’s Westinghouse acquisition lacked the technology and skills to build the complex reactors now required to meet the new standards.
Moreover, many of its nuclear projects were faced with cost overruns, chronic delays and long payback periods. For Westinghouse, the construction of two new U.S. reactors in Plant Vogtle, Georgia, is now USD6.9 billion, or 49 per cent, over its original budget and three years behind schedule. Similar concerns also plague France’s state-backed company EDF’s Hinkley Point C project, which was approved last year by the British government.
In early February, Toshiba announced plans to withdraw from its lead role in building complete nuclear plants in the U.K. and in India. Instead, the company will focus on providing nuclear reactors and services rather than civil engineering and power plant construction. The future of both projects is now in doubt as there appears to be little interest in the multi-billion U.S. dollar projects.