RWE npower and E.ON drop out of UK nuclear project

German energy providers E.ON and RWE have unexpectedly pulled out of a project to build nuclear power plants in the UK in a move the UK government has described as ‘disappointing’.

It’s a serious blow to government plans for a new generation of atomic power stations and raising concerns about Britain’s energy security.

Nuclear power plant

The Financial Times reports that both E.ON and RWE said they were putting their Horizon nuclear joint venture up for sale. The companies cited the economic crisis and the impact on balance sheets of Germany’s move to abandon nuclear power.

“The decision was based on strategic grounds as well as the financial constraints of the two companies,” said Tony Cocker, chief executive of E.ON UK, adding that relatively high gas prices in Europe were also a factor. “We therefore have less financial power than we had,” he said.

Both utilities remained committed to investing in other forms of energy generation in the UK.

The government insisted its plans for the construction of up to 12 new reactors ” to promote low-carbon sources of electricity ” remained on track, but critics said the move was a setback. Eon and RWE were among four utilities planning to build reactors in the UK.

“It is difficult not to read it as a vote of no-confidence in the UK,” said Tim Yeo, the Conservative chairman of the energy and climate change select committee. “There are a limited number of companies who have the financial muscle to take on this kind of commitment and it seriously raises the possibility that the cost of our greenhouse gas reduction will be much higher if a bigger proportion has to come from expensive wind energy.”

The decision also raised concerns over the UK’s future energy security, analysts said. The country is set to lose 12GW or 13 per cent of its installed coal generating capacity in 2015 and a further 7GW of nuclear capacity by 2020 due to planned decommissioning.

If no new owner is found for Horizon it could reduce the number of reactors likely to be built, with two consortiums remaining: one led by EDF Energy, a subsidiary of French utility EDF, with Centrica of the UK; and one made up of GDF Suez of France and Iberdrola of Spain. SSE, the UK utility, pulled out of the latter consortium last year.

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