Fresh blow for UK energy policy as GDF seek concessions

The UK government’s energy policy has received a further setback with the news that the CEO of GDF Suez has reservations on whether the company can proceed with building a nuclear plant in Cumbria, England.

The French firm’s chief said the company needed more financial incentives if it was to proceed.

Gérard Mestrallet, chairman and chief executive of the French firm, said he wanted talks with the government about the right fixed or minimum price for producing nuclear energy: "We are, with our partners, going to take a decision in 2015 [on building a new plant at Sellafield]. Today it is very difficult to invest in a nuclear power plant without clear visibility."

The government has promised to provide a fixed carbon price to make nuclear investment more attractive, and has proposed a "contract for difference" which some say will act as a price guarantee. But Mestrallet said what was on offer was "not enough and something is missing"

With the recent opt out by RWE and E.ON from participation in UK nuclear development, the news represents more bad news for the government.

Mestrallet's words make clear that GDF will only proceed if the British government makes further concessions to nuclear, something industry critics feared would happen.

The GDF warning came as the French grip on Britain's energy infrastructure tightened with a plan to take full control of International Power (IP) for about £6.5bn.

IP operates key power stations around the country including the gas-fired plant at Satend near Hull and a coal-fired facility at Rugely, in Staffordshire, as well as many others abroad.

The move could exacerbate concerns about the undue influence of companies partly owned by the French state such as EDF, Areva and GDF – which have already big stakes in the British energy market. The French government is the biggest shareholder in GDF with 36 per cent.

GDF, the world's largest independent power producer, bought 70 per cent of IP in 2010, but has now agreed to buy the remaining stake for 418p a share.

Mestrallet said the acquisition of the minority stake in IP constituted a major step that would "allow the group to fully capture growth in fast growing markets".

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