British nuclear plans suffer blow as Chinese investors pull out

The government's nuclear energy plans were in trouble on Wednesday with Chinese investors withdrawing interest in two projects and local councils postponing a decision on hosting atomic waste storage.

Areva, the French nuclear engineering group, confirmed that it had pulled out of the running to buy a stake in Horizon Nuclear Power, the enterprise planning to construct new reactors at Wylfa in Wales and Oldbury in Gloucestershire. Areva said its partner, the state-owned China Guangdong Nuclear Power Group (CGNPC), had also shelved its bid.

"Areva and CGNPC have suspended their interest in the planned sale of Horizon Nuclear Power and did not submit a bid," an Areva spokeswoman said, adding that the company was still committed to new nuclear in the UK through other avenues.

This is a blow for the government because Areva is the most advanced with getting regulatory approval for the design of its European Pressurised Reactor (EPR) while the Chinese are considered to have the deepest pockets.

Two other bidders, one involving US based engineering group Westinghouse and the other led by Hitachi of Japan, are still in the running to take a stake in Horizon – although Westinghouse's backer, another Chinese state-owned firm, China National Nuclear Power Corporation, is also understood to have withdrawn from the consortium.

"The Chinese could not get the commitments they were looking for from the British government," said one source with contacts in the Beijing nuclear industry, adding the problem was about technology rather than political issues. Some British MPs and commentators had raised questions about the wisdom of allowing Chinese state firms access to sensitive UK energy systems.

There have also been reports that Iberdrola, the Spanish group that owns Scottish Power, is considering dropping out of a separate consortium bid to build a new nuclear plant near Sellafield in Cumbria, while France's EDF was said to be struggling to complete work on a generic design assessment it needs in order to proceed with building a new atomic power station in collaboration with Areva at Hinkley Point in Somerset.

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