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Nuclear giants RWE and EON drop plans to build new UK reactors

Oldbury Nuclear Power Station, Gloucestershire


Powered by Guardian.co.ukThis article titled “Nuclear giants RWE and E.ON drop plans to build new UK reactors” was written by Fiona Harvey and Dan Milmo, for guardian.co.uk on Thursday 29th March 2012 09.52 UTC

The government’s nuclear energy policy is in disarray after German utilities RWE and E.ON dropped their plans to build two reactors in the UK.

RWE confirmed this morning that it is ending the Horizon joint venture and putting its stake on the market. According to industry sources, the Horizon consortium owned by RWE and E.ON is up for sale following a row over the technology that would be used in the power stations planned for Wylfa in Wales and Oldbury in Gloucestershire.

A senior nuclear industry figure told the Guardian that the German government’s abandonment of nuclear power last year in the wake of the Fukushima disaster had played a significant role. The source said: “This is an obvious consequence of what happened in Germany last year. It’s a total train wreck – you can’t imagine the importance of this to the economy of north Wales. This programme is bigger than the whole Olympics. The government now has to try to find another buyer.”

France’s EDF is now the most likely buyer of the Horizon consortium, but the project would still be mired in wider doubts over nuclear power’s future, while the government is still working on a floor price on carbon that would financially underpin a multi-billion pound construction programme.

Horizon had planned up to 6,000MW of new nuclear plants in Britain by 2025, encouraged by a more pro-nuclear government than in other countries, and driven by a target of reducing carbon dioxide emissions by 80% by 2050.

“E.ON and RWE’s withdrawal is clearly very disappointing, but the partners have clearly explained that this decision was based on pressures elsewhere in their businesses, and not any doubts about the role of nuclear in UK’s energy future,” said energy minister Charles Hendry. “The UK’s new nuclear programme is far more than one consortium and there remains considerable interest. Plans from EDF/Centrica and Nugen are on track and Horizon’s sites offer new players an excellent ready-made opportunity to enter the market.”

The row over who will build the reactors for the Horizon venture has threatened to develop into a full-blown legal confrontation in recent months. Detailed legal documents drafted by a competitor, seen by the Guardian under condition of anonymity, state that if France’s Areva wins the contest to build the Wylfa and Oldbury reactors, it will secure a market monopoly that should trigger a “sector inquiry”. Areva is owned by the French state and is competing against Westinghouse, owned by Japan’s Toshiba, to build the Wylfa and Oldbury sites.

Giving an insight into the tensions behind the contract, the document argues that awarding the contract to the world’s largest reactor maker will have a detrimental effect on UK jobs.

“It will have a permanent and significantly negative impact on the UK nuclear industry, jobs, manufacturing skills, supply chains and SMEs. Westinghouse have pledged to ‘buy where they build’ and source 70% UK content, Areva have existing supply chains in France and their UK commitment would be significantly less.”

The document also warns that an Areva win would tie up the British nuclear market because France’s state-owned EDF, a minority shareholder in Areva, is the dominant player in the UK nuclear sector.

The Horizon news also raises questions over E.ON’s and RWE’s bills to UK consumers. High bills have been justified by the need to finance major investments in nuclear power. That explanation faces challenges in the wake of today’s news. RWE owns npower in the UK.

guardian.co.uk © Guardian News & Media Limited 2010

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