Two giant German firms, E.On and RWE, are to pull out of building new nuclear power stations in the UK. It's the first fallout from the Japanese Fukushima disaster to hit Britain's nuclear industry.
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The joint venture run by the two firms, Horizon, was planning to build new nuclear plants at Wylfa on Anglesey, and Oldbury-on-Severn in Gloucestershire. The companies blamed the scarcity of capital in an economic crisis, the ‘significant ongoing costs’, and the fact that their home country has turned its back on nuclear power.
The German chancellor Angela Merkel said "Atomkraft nein danke" in the wake of last year's disaster at the Japanese nuclear power station at Fukushima. "That is effectively a treble whammy for our organisations," said Volker Beckers, chief executive of RWE NPower. "We had to close power stations in a very short time frame, and we have a now much accelerated decommissioning programme."
Half the country’s German nuclear power stations have closed already, and the rest will close by 2022 – robbing the E.On and RWE of a revenue stream and replacing it with a huge bill for decommissioning. The consequences of this decision have now been felt in Britain.
The withdrawal leaves two nuclear operators still interested in the UK. EDF, partly owned by the French state, owns five sites across England, including Hinkley Point, (where planning permission has already been requested), as well as Bradwell, Heysham, Hartlepool and Sizewell.
A further site at Moorside, near the Sellafield nuclear plant in Cumbria, is owned by the Nugen consortium, comprised of the Spanish energy company Iberdrola and the utility GdF Suez, also part-owned by the French government.
The energy minister Charles Hendry called the decision "very disappointing", saying "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."
New bidder unlikely
But it is unlikely that a new bidder will step forward to take up the two sites which the German companies are now selling. “Realistically, it’s likely to be one of the two consortia which are considering nuclear build in the UK,” says Malcolm Grimston, nuclear expert at Chatham House. “There may be other players out there, but most of the big European utilities were already involved in one of the three bids, so there isn’t a lot of capital around in Europe.”
The future of the UK’s nuclear programme now rests heavily on the French, with EDF holding exactly the dominant position the government had hoped to avoid. EDF’s chief executive Vincent de Rivaz said his company “remains focused on our project and nothing has changed with regard to that. We are determined to make UK new nuclear a success. We are determined to make UK new nuclear a success.”
But that commitment rests on the government agreeing a price for nuclear energy which is sufficiently high to cover the huge costs of building the new stations. And the withdrawal could cost British construction firms and other suppliers business.
If it does take over the Oldbury and Wylfa sites, EDF would be likely to choose Areva as its main construction partner, giving it a virtual monopoly of UK nuclear construction. Areva’s main rival, the Toshiba-owned Westinghouse, would be shut out of the business.
Legal documents drawn up by one of Areva’s rivals, seen by the Guardian newspaper said: “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."