RWE E.ON End UK Nuclear Plans
by David Phillips
Wylfa B on Anglesey is at risk as German energy firms, RWE and E.ON pull out of UK new nuclear build, according to sources close to the company.
Through their joint venture, Horizon Nuclear Power, the two German utilities had planned to build a new nucler power station at Wylfa Head, adjacent to the existing Wylfa A plant.
A total of 6,000 MW of new generating capacity was on the cards, with a new station also earmarked for Oldbury in Gloucesterhsire. Potentially up to 6,000 construction jobs would have been created, followed by around 1,000 permanent posts during the operational phase.
While nuclear energy is not a devolved matter, the Welsh Government believes it plays a strategic role as part of a balanced energy mix, which includes the Wylfa site on Anglesey.
Accordingly, the Welsh government spokesperson said: "The first minister has made it clear that Anglesey remains the best option in the UK for a nuclear development.
"There is live and significant interest in the site, and the first minister has asked for the full support of the UK Government as we work with Horizon to deliver this investment and secure jobs for workers at Wylfa in the future."
Commenting on the announcement about Horizon Nuclear Power, Energy Minister Charles Hendry said:
"EON and RWE’s withdrawal is clearly very disappointing, but the partners have clearly explained that this decision was based on pressures elsewhere in their businesses and not any doubts about the role of nuclear in UK’s energy future.
"The UK’s new nuclear programme is far more than one consortia and there remains considerable interest. Plans from EDF/Centrica and Nugen are on track and Horizon’s sites offer new players an excellent ready-made opportunity to enter the market."
Meanwhile, the Secretary of State for Wales, Cheryl Gillan, said: "Anglesey has nearly 50 years of experience of the nuclear industry and has developed skills that are second to none. This gives me confidence that the site at Wylfa will be attractive to other investors.
"I have spoken to RWE on the rationale for this commercial decision, and I plan to meet them at the earliest opportunity."
Among the reasons given for this decision appears to be the increased costs incurred due to overruns
in completing new build in Europe, including reactors in France and Finland.
There is also the matter of the about turn on nuclear policy by the German government following the Fukushima incident last year.
Both RWE and E.ON have considerable investment in the German energy infrastructure, including a large nuclear component.
There were suggestions a few months ago that the German utilities were concerned about the continuing viability of the Horizon nuclear programme in Britain
The German government decision is having a profound impact on these energy utilities and so they appear to have taken a strategic decision to consolidate and pull back from overseaas investment in nuclear new build.
Unless another consortium is able and willing to come in and take up the baton from Horizon then the implications for Anglesey and the Energy Island concept are profound, to say the least.
It may be possible to revive the Wylfa B project perhaps if a sovereign wealth fund is attracted to the prospect of a long term infrastructure asset in the UK.
Volker Beckers, Chief Executive of RWE npower in the UK said the company "continues to believe that nuclear power has an important role to play in the UK's future energy mix.
"We are therefore looking to ensure that work on development, including grid connection, can be taken up quickly by other potential investors."
We will watch this space carefully.
Update: Another view as to the casue of this dramatic announcement relates to the competitive bid for the contract to supply the reactors for the proposed new nuclear reactors.
According to a report in the Guardian, there were concerns that should Areva, majority owned by the French Government, win the reactor design, this would effectively lead to a "monopoly" situation as another French state owned company EDF has a minority stake in Areva.
The other challenger in the GDA (Generic Design Assessment) is Toshiba Westinghouse, with its AP1000 reactor design.
While it would be likely that manufacturing supply chain jobs would shift to France if Areva's EPR won the bid, Westinghouse have said they would aim to source over 70% of their supplies from UK sources.
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