EDF completes £12.5bn nuclear takeover of British Energy

The UK took a major step towards its goal of building a new fleet of low carbon nuclear reactors yesterday after EDF completed its £12.5bn purchase of nuclear operator British Energy.

Finalising the deal, the French energy giant reiterated its commitment to build four new nuclear reactors in the UK and insisted it remained confident it could meet its target of having the first new plant on line by 2017.

However, EDF chief executive Pierre Gadonneix said that significant improvements to the UK's nuclear regulatory regime would be required if the 2017 goal is to be met.

In an interview with the Financial Times, Gadonneix said that while the UK government was committed to supporting the nuclear industry, more legislative reforms were needed to accelerate the development process.

"Clearly, the British government and many stakeholders are aware of the huge need for nuclear development as soon as possible," he said. "If we want to meet the 2017 challenge for the first EPR [European pressurised reactors] we must find ways to make the process as fluent as possible… That will take time and that will cost."

Speaking to BusinessGreen.com, a spokesman for the Department of Energy and Climate Change, insisted that the government had made it clear that it was fully committed to the planned new generation of reactors.

"[Energy and Climate Change Secretary] Ed Miliband has said in recent speeches that the commitment is there to get nuclear capacity up and running and get more than one operator into the market," he said.

Welcoming the completion of the EDF takeover, Miliband said yesterday that the move should help the UK meet its newly implemented carbon emission reduction targets.

"Given the challenge of climate change and energy security, it is right to embrace nuclear power as one of the technologies that can serve us in the future," he said, adding that the government was continuing to seek interest from other firms interested in operating UK nuclear reactors.

Under the terms of the deal, EDF has agreed to offload one potential site adjacent to existing British Energy stations at either Heysham or Dungeness, as well as land at Wylfa and Bradwell.

The government is now preparing to auction the sites at Wylfa and Bradwell, as well as a site at Oldbury in the West Midlands, to alternative operators.

A spokesman for DECC said that no date for the auction had yet been set, but according to various reports German energy group RWE, Swedish giant Vattenfall and Spanish firm Iberdrola are all expected to table bids, while Scottish & Southern is reportedly seeking a partnership with one of Europe's larger nuclear operators.

EDF said yesterday that it could also seek partners to take stakes in its planned new nuclear power stations to help cover the upfront costs.

It is already in talks with British Gas parent company Centrica about it taking a 25 per cent stake in British Energy for £3.1bn as part of a deal that could also see it take a stake in new reactors.

Gadonneix said that the negotiations with Centrica were ongoing and could be completed within two to three months. However, he also hinted that other companies could also potentially partner with EDF on new reactor projects.

"Centrica can be a partner, but it is not the only one for new nuclear," he told the FT.

In related news, one of the driving factors behind Centrica's desire to enter the nuclear market – volatile gas prices and supplies – was again underlined yesterday as the first reports emerged of reduced gas supplies to European countries arising from Moscow's ongoing row with the Ukraine over allegedly unpaid bills.

Russia stopped supplying gas to the Ukraine last week and energy giant Gazprom cut exports through Ukranian pipelines by a fifth. A statement from Ukrainian state energy company Naftogaz said that nine countries, including Germany, Poland and Hungary would receive reduced supplies as a result of the move.

According to BBC reports, Turkey has said it has already had all its gas supplies cut, while Romania has seen a 75 per cent reduction in supply. Bulgaria, Greece and Macedonia have also been affected.