Hitachi UK nuclear project expects government funding outline in H1 2018

* Hitachi gains approval for reactor design

* Govt has been criticised for previous nuclear deal

* Two Hitachi projects could power over 10 mln homes (Recasts story with expectations of support deal, updates with comment)

By Susanna Twidale and Nina Chestney

LONDON, Dec (Shanghai: 600875.SS - news) 14 (Reuters) - Hitachi's Horizon Nuclear Power unit expects to see an outline from Britain's government in the first half of next year on how it will help finance a nuclear project in Wales, the company said on Thursday.

Britain is seeking new ways to fund nuclear projects after criticism over a deal awarded to France's EDF (Paris: FR0010242511 - news) to build the first nuclear plant in Britain for 20 years, which could cost consumers 30 billion pounds ($40 billion).

"We are having positive discussions with the government ... which we hope will result in an outline for a deal in the first half of next year," a spokesman for Horizon told Reuters.

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.

A spokesman for the Department for Business, Energy and Industrial Strategy said the Horizon project was part of efforts to put Britain "at the forefront of future technologies which have the potential to create value and jobs across the UK."

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 and a second at Oldbury-on-Severn in England.

Horizon said the two projects could generate enough electricity to power 10 million homes and create tens of thousands of jobs.

Britain's nuclear regulator on Thursday approved the Hitachi-GE's advanced boiling water nuclear reactor design it plans to use at the sites.

The Office for Nuclear Regulation (ONR) said it was satisfied Hitachi-GE's reactor met the necessary safety, security and environmental protection standards for it to be used in plants in Britain.

"(This) is a significant step in our regulation of the overall process to construct this type of reactor in the UK, ensuring that the generic design meets the highest standards of safety," said Mark Foy, ONR’s chief nuclear inspector.

Separately, South Korea's state utility Korea Electric Power (KSE: 015760.KS - news) Corp (KEPCO) said last week it had been picked as a preferred bidder for Toshiba (Swiss: TOSH.SW - news) 's NuGen nuclear project in Britain, throwing the troubled project a lifeline.

KEPCO said in a statement the company planned to negotiate with Toshiba over the next few months to buy a stake in the nuclear project and sign a deal in the first half of next year if the negotiation progressed smoothly.

($1 = 0.7448 pounds) (Reporting by Susanna Twidale and Nina Chestney; Editing by Adrian Croft and Edmund Blair)