E.ON and npower form nuclear family

RWE npower and E.ON UK yesterday announced plans to become the latest entrants to the UK nuclear energy market with the launch of a new £20bn joint venture designed to develop at least four new nuclear power stations.

The German-owned energy giants said they are entering into a 50-50 partnership to build and operate the stations which will produce 6GW of power as part of the UK government's plan to deliver a low carbon "nuclear renaissance" in the UK.

RWE npower and E.ON are two of the UK's biggest energy suppliers, and already jointly own three nuclear reactors in Germany. But the firms have been looking to expand their nuclear operations abroad since the German government announced it would decommission its nuclear programme by 2021.

Andrew Duff, chief executive of RWE npower, said that the new joint venture would look to accelerate the development of new nuclear reactors in the UK.

"This joint venture will deliver an early, substantial and vital contribution from nuclear power," he said. "At the same time, large infrastructure projects can bring major benefits to the UK economy through jobs, direct investment and supply chain opportunities."

Two likely sites for entirely new stations have already by selected. Last month, npower secured a grid connection for a proposed station at Anglesey in North Wales, while E.ON has obtained permission to connect to the grid at Oldbury-on-Severn in Gloucestershire.

Other possible sites include former British Energy sites such as Bradwell in Essex and Dungeness in Kent, which EDF – British Energy's new owner – is expected to dispose of in the months ahead.

In August last year, French utility EDF agreed to buy British Energy for £12.5bn and taking control of eight UK nuclear power plants while agreeing to build four new reactors in the process, the first of which is now expected to come online by 2017.

Under the terms of the deal, EDF also agreed to sell some of the sites it has acquired to other nuclear operators, in a move the government hopes will help increase competition in the sector.

Dr Paul Golby, chief executive of E.ON UK, said that there was a strong commercial, political and environmental case for the expansion of UK nuclear capacity.

"The UK has to replace a third of its generating capacity in the next 15 years in a way that ensures security of supply, reduces carbon emissions and keeps energy as affordable as possible," he said. "The only way we can achieve this is to have a diverse energy mix, and new nuclear power, alongside cleaner fossil fuels, renewables and energy efficiency, will be vital going forward."

Neither E.ON or RWE announced a fixed timescale for construction. The consortium says it retains an open position on the reactor technology for individual sites and will make a selection based on assessment of the technical and commercial merits, though reports in The Times suggest Japan-based Toshiba-Westinghouse will get the nod for a bulk deal.