Hollande effect has left Britain facing prospect of nuclear meltdown

Government waits on EDF before inviting foreign bids for new power plants, writes Oliver Wright

Six years ago today Tony Blair stood up at a dinner of leading industrialists and figuratively pushed Britain's nuclear button.

Pre-empting the outcome of his own review into the country's future energy needs, he announced that to 'keep the lights on' and prevent global warming the Government was backing the creation of the first new generation of nuclear power stations in a decade. "If we don't do this now," he said, "we will be committing a serious dereliction of our duty to the future of this country."

But despite the political will of Blair and his successors, Britain's nascent new nuclear programme is in trouble. A combination of the economic crisis, last year's nuclear disaster in Fukushima and changing political winds across Europe has put the project in jeopardy.

Yesterday, giving evidence to Parliament, the Energy Minister Charles Hendry appeared to be unable to guarantee with certainty that any of the five agreed new nuclear power plants would go ahead.

And while he expressed optimism that the projects were still on track, many industry observers are now pessimistic that Blair's original ambitious plans to rebalance our energy supply can be delivered on time and at a price which is acceptable to consumers and the Government.

That, in turn, leads to the disturbing question first raised by Blair in 2006: with all of our current nuclear power plants due to stop working within 10 years, if things go wrong with new nuclear now, what will it cost to keep on the lights?

The first sign of trouble came in March when the German power companies RWE npower and E.ON announced they were pulling out of their joint venture to build two of the six planned new nuclear reactors at Wylfa in North Wales and Oldbury-on-Severn, Gloucestershire.

The companies had been hit by Angela Merkel's decision, in the wake of the Fukushima disaster, to pull back from nuclear power – immediately mothballing six plants and shutting all the country's 15 reactors by 2022.

This meant that not only did they have to spend billions decommissioning the existing plants but economies of scale meant it was not practical to go-ahead with a £15bn nuclear investment in the UK at a time when their home market was disappearing entirely. If that was not enough, now doubt has been cast over the commitment of a joint EDF Energy/Centrica consortium to fulfil its commitment to build two other nuclear reactors at Hinkley Point in Somerset and Sizewell, Suffolk.

EDF is state-owned and, while President Sarkozy had a warm relationship with the nuclear sector, his successor Francois Hollande does not. During the election campaign he pledged last year to close 24 of France's 58 nuclear reactors and to reduce the country's reliance on atomic power.

With EDF expected to make a final decision on whether to go ahead with the UK projects by the end of the year, the change of Government could not have come at a worse time.

All in all, EDF's commitment to new nuclear in Britain looks decidedly shaky. Meanwhile the third nuclear consortium, Nugen, has also faced various problems.

This creates a considerable headache for the Government. As Tim Yeo, Chairman of the House of Commons Energy and Climate Change Committee puts it: "Nuclear energy is exposed to what happens around the world. The industrial nuclear accident in Japan, a decision taken in Germany, the change in Government in France – all these things have a direct impact on global investment in nuclear in this country.

"However good the intention is, we are exposed in a particular way – unlike with some other energy sources – to what happens in countries quite a long way away which are completely outside our control."

The answer from Mr Hendry was instructive. He confirmed yesterday that the British Government has no objection to allowing the contracts for new nuclear plants to pass to nuclear operators such as China, Russia and Japan to keep the programme alive.

"We need to look at other international investors as we would in any other sector of the energy market," he says. "As long as they can satisfy us on the safety and the security then we are happy to talk them to see how we can help us take this forward.

"There is no objection in principle for [countries such as Russia, China and Japan] being involved at all."

That's fine for the Government to say but the handing over of next generation of such a sensitive technology to a Chinese or Russia state enterprise is certain to re-ignite concerns about nuclear – not just among environmentalists but the wider public as well.

But then we may have little option. Ministers are still faced with the dilemma that led Blair down the nuclear road in the first place.

Coal and gas currently mean carbon emissions which we are legally obliged to reduce drastically, renewables can't yet fill the gap and ultimately we have to keep on the lights.