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backer, another Chinese state-owned firm, China National Nuclear Power Corporation, is also understood to have withdrawn from the consortium.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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The Spanish power company is analyzing Horizon Nuclear Power, a venture of RWE AG (RWE) and EON AG, as a possible acquisition target by its NuGen venture with GDF Suez (GSZ), the Spanish newspaper said. NuGen would have to pay about 300 million pounds ($485 million) for Horizon, according to analysts, the report said.

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China Nuclear Company in Talks to Bid for Horizon, Express Says

State Nuclear Power Technology Corp, a nuclear company backed by the Chinese government, is in talks to fund a bid for Horizon Nuclear Power, the venture set up by German power makers RWE AG (RWE) and EON AG to build nuclear reactors in the U.K., the Sunday Express said, citing unidentified sources at Whitehall.

The Chinese company is in talks to join forces with Japan’s Toshiba Corp (6502), the owner of nuclear maker Westinghouse, for the bid, which would exceed $10 billion, according to the newspaper. Russian company Rosatom Corp also expressed an interest in Horizon, the newspaper said.

England: Wylfa B nuclear plant: Talks to find new investors

Talks are continuing to find investors after a company which was to build a new nuclear power station on Anglesey pulled out.

E.ON and RWE npower are looking for a new owner for Horizon Nuclear Power, the joint firm to develop Wylfa B.

Experts, politicians and community leaders say they are hopeful a new buyer can be found.

However, opponents to the Wylfa plans say alternatives to nuclear energy should now be found.

The German-owned companies blamed the global economic crisis, developments in the nuclear industry in Germany and what they called the "significant ongoing costs" of running the Horizon joint venture for the decision.

'Switching supplies off'

However, Volker Beckers, chief executive of RWE npower, said Wales was still one of the "most attractive" new nuclear sites across Europe.

"A new investor can effectively leapfrog the queue. In other words, any investor will benefit from the great work the team has done over the last three years," he said.

Nuclear energy expert Malcolm Grimston, a fellow at Chatham House, told BBC Radio Wales said Horizon provided other investors with an "opportunity".

"If we don't build nuclear to replace Wylfa and the other plants as they come off line then we are going to be importing a lot of gas, producing a lot more carbon emissions, and vulnerable to either Russia pushing the price up or switching the supplies off so the argument for continuing nuclear is as strong as it was," he said.

"And I think other companies, maybe existing consortia or others may well reassess the situation and take advantage of this opportunity."

Horizon had planned up to 6,000 megawatts of new nuclear plants in Britain, including Wylfa B, which they saw as more friendly to nuclear energy than other countries.

But the parent companies had been indicating recently that they were concerned about possible cost overruns as seen at other nuclear projects in Europe.

The Welsh government says Anglesey remains the best option in the UK for a nuclear development.

The Wales Green Party welcomed the decision, claiming it would help renewable industries.

Pippa Bartolotti, leader of the Wales Green Party said the costs of "unwanted nuclear sites were always going to be unsupportable".

"Germany and Japan know the price is too high for the environment. With new nuclear going way over budget and with no safe build in sight, we can at last reflect on the wisdom of using this type of energy.

"The intelligent way forward is to invest in renewables such as solar, tide and wind. Green energy will always provide us with more jobs, safer living and greater energy security."

Labour MP Albert Owen said it was a massive blow to the community, regional economy and energy industry.

'Absolutely committed'

Plaid Cymru AM Ieuan Wyn Jones said he would also be working in the efforts to secure another company to take the project forward.

Anglesey council said it remained "absolutely committed to securing new investment and other energy generation schemes".

Welsh Secretary Cheryl Gillan was also disappointed but said Anglesey's 50 years of experience in the nuclear industry gave her confidence the Wylfa site will be attractive to other investors. ‪ ‪

But groups including People Against Wylfa B (Pawb) who opposed the development have welcomed the decision.

Horizon Nuclear Power had hoped construction of the £8bn project would start towards the end of 2012.

It had been developing options for two to three new reactors next to the existing Magnox station, which had been given permission to operate until 2014.

Wylfa B has been seen as promising an economic lifeline to the people of Anglesey.

According to the proposals, about 5,000 construction jobs would be created while the plant is built, and between 800 and 1,000 people would be employed in the station from 2020.

In March 2011 Horizon said it needed to "take stock" of its plans following the Japanese earthquake and tsunami.

Plaid Cymru energy spokesperson Alun Ffred Jones told BBC Radio Wales that focusing Anglesey's future development on nuclear power "shows the danger in putting all our eggs in one basket".

"If we are serious about Anglesey as an 'energy island' then we have to invest in other forms of energy production."

Welsh Conservative leader Andrew RT Davies said developing the power plant was "critical" for the "economic future of the island".

He said unless the UK's nuclear infrastructure was "sorted" it would create a "pinch point" in meeting future energy needs.

Liberal Democrat AM Aled Roberts said the island had been planning its economic future around the power station.

"A lot of their economic development policies are actually based on the whole concept of the energy island," he said.

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