Government nets £387m as nuclear auction ends

The auction of sites for new nuclear power stations finally closed yesterday, netting the Government £387m and bringing a consortium of RWE npower and E.ON into the UK sector for the first time.

Two of the three sites owned by the Nuclear Decommissioning Authority (NDA) – at Wylfa in Anglesey and Oldbury in Gloucestershire – were bought by the German group. The remaining land, at Bradwell in Essex, was bought by the French company EDF.

Bidding for the three sites only ended after a third consortium of Scottish and Southern Energy, Iberdrola and Suez pulled out on Monday night. The auction had been expected to last little more than a week and raise not much more than £100m. But fierce competition ran on for more than six weeks and more than tripled the final bill.

The Iberdrola group blamed its withdrawal on the sky-high prices after bidding for Bradwell reached £160m, more than four times the original estimate. Wylfa, always expected to be the most expensive, is understood to have raised more than £200m.

The energy companies laid out their stalls in advance. RWE bought land and organised a National Grid connection alongside Wylfa, and E.ON bought land at Oldbury. EDF already owned a piece of land right in the middle of the Bradwell site, through its £12.5bn purchase of British Energy last autumn.

But all is not over for putative nuclear builders. The NDA will start the process to auction another site, at Sellafield, within weeks. And despite its successes yesterday with Bradwell, EDF may yet put the land back on the market. The French giant is planning to build two nuclear stations by 2025, one at Hinkley Point in Somerset, and one at Sizewell in Suffolk. Bradwell was an insurance policy against hold-ups in the planning process and, if developments progress as planned, it is likely to be sold. EDF is also to put land at either Heysham or Dungeness up for sale.

Ed Miliband, the Energy Secretary, said: "The successful outcome of this site auction is yet more evidence of major energy players gearing up for investment in low carbon energy in the UK."

The NDA will use the proceeds from the sales to help fund the cost of decommissioning.