German utility prepares to build two nuclear power stations in UK

E.ON, the German-owned utility which supplies gas and electricity to millions of customers in Britain, said yesterday that it planned to build two nuclear power stations in the UK.

The company, which has run into controversy over its plans to build a coal-fired plant at Kingsnorth, Kent, wants to use a new generation of 1,600MW atomic reactor, designed by Areva of France.

E.ON, which is also pressing ahead with wind farm developments, has not officially revealed where it wants to build the plants but sources say it is considering sites in the south of England now owned by British Energy.

"It's clear that a new generation of nuclear power stations will ensure that the UK will have a secure and reliable source of low-carbon power for decades to come, and E.ON is right at the forefront of those plans," said the firm's UK chief executive, Paul Golby. "It's now up to us to work with our partners and with government to make that a reality."

E.ON, which has been building its public profile in the UK by sponsoring the FA Cup, has signed a letter of intent with Areva and the German engineering group Siemens, to help build the plants, which are unlikely to be in place before 2018.

E.ON has joined the French electricity provider EDF in making explicit its desire to press ahead with nuclear given government provision of the framework. There has also been speculation that RWE, of Germany, would like to construct a facility to replace the nuclear power station at Wylfa, on Anglesey, Wales.

The momentum comes amid talks between E.ON, EDF and RWE with the UK's nuclear operator, British Energy, which generates 18% of the country's electricity from its existing facilities and owns the key sites that could be used for a new generation of plants.

British Energy is a potential takeover target of EDF and RWE. Sources close to E.ON say the German group is interested in a small equity stake in the nuclear generator rather than full control but is fearful that EDF or another firm might buy the company outright and effectively gain a stranglehold on the best potential newbuild sites.

It seems clear that E.ON would be willing to ask that the government or industry regulator prevents any one company getting an unfair advantage.

EDF, the world's largest nuclear operator, could team up with Centrica, the owner of British Gas, to make a bid for British Energy, while RWE, possibly in cooperation with Vattenfall, of Sweden, could be another bidder for the UK group, which is owned 35% by the government. RWE is already reported to have proposed a 700p indicative offer for the UK nuclear firm, valuing it at £11bn.

(Source: Guardian)