Britain may invest directly in Hitachi's Welsh nuclear plant

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LONDON, June 4 (Reuters) - Britain is considering direct investment to help a unit of Japan's Hitachi Ltd build a new nuclear power station in North Wales, the country's business minister said on Monday.

Britain needs to replace ageing nuclear reactors and coal plants coming offline in the 2020s, but new large plants have struggled to be built due to high up-front costs.

Hitachi's Horizon plans to construct at least 5.4 gigawatts of new nuclear capacity at two sites in Britain – the first at Wylfa Newydd in Wales.

"For this project, the government will be considering direct investment alongside Hitachi and the Japanese government agencies and other partners," Greg Clark told parliament.

He said negotiations with Hitachi will now begin and a key focus will be on achieving a lower cost for consumers.

The government's last nuclear deal, agreed in 2013 for EDF (Swiss: EDF.SW - news) to build Hinkley Point C -- the first new nuclear plant in Britain in 20 years -- has been criticized for being too expensive and could cost 30 billion pounds.

As part of extensive reforms to Britain's electricity market, the government replaced direct subsidies with a contracts-for-difference (CfD) system.

Under the scheme, qualifying projects are guaranteed a minimum price at which they can sell electricity, with the government making up any shortfall between the guaranteed price and the prevailing market price.

Britain’s latest auction for offshore wind subsidies, held last year, awarded contracts as low as 57.50 pounds per megawatt hour (MWh).

The Hinkley deal, agreed in 2013, gives EDF (Paris: FR0010242511 - news) a minimum price guarantee of 92.5 pounds ($122) per megawatt-hour, inflation linked, for 35 years. (Reporting by Andrew MacAskill; Editing by Kevin Liffey and Alexander Smith)