Britain's nuclear push may stall

2012-11-07 20:17
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London - Britain's nuclear power generation future may be at risk as the list of potential operators shrinks due to concerns about the high costs of entry.

The British government wants to build around 10 nuclear power stations by 2025, which it says are necessary to keep the lights on in future decades, reduce dependence on foreign gas and meet tougher carbon targets.

But persuading potential operators to invest in nuclear generation could involve guaranteeing minimum power prices far above what cash-strapped government departments and households would be willing to pay, analysts said.

"The rewards from nuclear are likely to be far below what companies would require to justify this level of investment and the risks are enormous," said Tom Burke, a consultant with environment and energy advisory E3G and former adviser to the British government on energy policy.

The Emirates Nuclear Energy Corporation (Enec) is in talks with Japanese conglomerate Hitachi about taking a share of the Horizon nuclear project, which last week was sold by E.ON and RWE after the German utilities cited unacceptably high costs of building new plants.

Hitachi this week has started considering which other potential operators it could approach for the Horizon nuclear plants, a company spokesperson said.

Analysts say that Enec would not be an optimal partner since it so far has no experience in operating a nuclear plant itself.

The first of its Korean-built reactors is expected to come online in 2017.

Sweden's Vattenfall, which runs reactors in Germany and Sweden, previously stated its interest in UK nuclear operations, but the company said it had no plans of investing in the Horizon project.

Exelon, the largest US nuclear operator, also said it was not interested in the UK nuclear market.

E3G's Burke said that allocation would be capped around £4bn by 2015, while the costs of nuclear construction could rise to over £12bn a year by the mid-2020s.


Read more on:    uk  |  nuclear
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