German utilities RWE and E.ON have decided not to proceed with plans to construct new nuclear power plants in Britain and will seek a new owner for their joint venture company, Horizon Nuclear Power. Their decision, announced on March 29, followed strategic reviews undertaken independently by the two concerns. Statements released by both companies referred to the impact of the accelerated nuclear phaseout in Germany, which has resulted in their having recently reported substantial losses due to the closure of their oldest nuclear plants.
Horizon Nuclear Power was established by the utilities' British subsidiaries in 2009. Since then, the company had developed proposals for new nuclear power stations at the existing nuclear sites of Wylfa and Oldbury, with a potential generating capacity of up to 6600 MWe. Land had been purchased at both locations, and a decision on which reactor type to build was expected early this year.
According to their statements, the companies' current financial situations have led them to take a number of measures. For RWE, this included selling assets, increasing capital, and maintaining a tighter capital expenditure budget. RWE also pointed to the high costs of running the Horizon joint venture and the difficulty in today's economic climate of raising capital for major projects such as nuclear power plants due to their large scale and long lead times and payback periods.
Tony Cocker, chief executive of E.ON UK, said that the company will now focus its investments in the United Kingdom on "other strategic projects that will allow us to deliver earlier benefit for customers and our company, rather than the very long-term and large investment new nuclear power calls for." This will include renewables, distributed energy, and energy efficiency, according to the company's statement. E.ON UK already operates 21 wind farms and the country's first wave power generator, with another 1500 MWe of renewable capacity under development.
Looking forward, Horizon's chief operating officer, Alan Raymant, said, "We have made good progress in developing our sites, in particular our lead site at Wylfa, and a strong organization capable of delivering nuclear new build in the U.K. We will now focus on consolidating the progress made and working with our shareholders as they investigate the opportunities for new ownership." He also noted that Horizon has enjoyed "broad public and political support, in particular from the communities around our sites. This continues to make nuclear new build an attractive proposition in the U.K."
The Horizon decision also casts a shadow over the British government's plan for a new fleet of nuclear plants by 2025. It also makes the country's new-build program more dependent on EDF Energy, the British subsidiary of Electricité de France, which plans to build several plants, including Britain's first new reactors at Hinkley Point, for which a final investment decision is expected later this year.
Following the Horizon announcement, U.K. Energy Minister Charles Hendry said, "E.ON 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 on any doubts about the role of nuclear in U.K.'s energy future." Also, he stressed, "The U.K.'s new nuclear program is far more than one consortium, 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."
With EDF Energy planning to build Areva EPR reactors, Westinghouse has focused on convincing Horizon and NuGen, the other nuclear joint venture, to order its AP1000 reactor. In a statement, the company said that its "resolve and commitment to the U.K. and its nuclear industry is unshaken," and that over the next few weeks, it would "engage Horizon and its owners to determine the best direction for continuing the development of these projects and to explore alternative investors in the company."
Copyright 2012 American Nuclear Society. All Rights Reserved.
(Originally published May 1, 2012, in Nuclear News.)