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Avera and Guangdong Nuclear drop UK Nuclear Bid

4 October 2012

Avera and Guangdong Nuclear drop UK Nuclear Bid

Areva SA and China Guangdong Nuclear Power Group Co. (CGNPC) have decided not to bid for the new-build nuclear Horizon project in the UK. The two companies had initially indicated their interest in the project three months ago but failed to submit a bid before the deadline. The two companies have yet to make any comment on the reasons for the change in interest.

The project was originally put up for sale by the original contractors, German utilities E.ON and RWE who decided not to proceed after the German government’s decision to pull out of domestic nuclear power damaged their balance sheets. Two other bids were apparently received for the project from Westinghouse (owned by Toshiba) and Hitachi.

The project is part of the UK government’s plan to increase the proportion of power generated by domestic power plants. It currently plans to build two nuclear plants adjacent to the existing Oldbury and Wylfa power stations for a total capacity of 6GW.

Comment

Germany’s decision to abandon nuclear power continues to have repercussions, even in markets which are still eager to implement new-build nuclear power capacity. Although some comments seemed to suggest that the reasons for the project being dropped were mostly technical, there has also been speculation that Areva and CGNPC were unable to receive sufficient guarantees from the UK government.

The viability of nuclear power without sufficient government subsidy or guarantees has been an issue of debate for some time now and this episode is unlikely to encourage future investors. Any further delays to the UK’s nuclear power plans will mean that other sources of energy will be needed to fill the gap. Although renewable capacity in the UK has been growing, it is likely that any baseload shortfall from nuclear will be filled with either gas or coal-fired generation, potentially increasing the emissions in the UK.

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