SSE ditches nuclear power for gas, wind and biomass

Scottish and Southern (SSE), the UK's second-biggest energy generator, has abandoned its quest to develop nuclear power in favour of producing more electricity from renewable energy sources such as wind farms and biomass plants.

Dealing a blow to government plans to ramp up nuclear generation, SSE has pulled out of a joint venture with France's GDF Suez and Spain's Iberdrola that would have involved it in atomic energy for the first time.

SSE has sold its 25 per cent stake to its partners in the NuGeneration consortium, which will develop two or three 1.6GW reactors at Sellafield.

Alistair Phillips-Davies, SSE's director of generation and supply, said: "It made sense to be part of NuGen to help establish whether some participation in new nuclear power stations would be the right thing for SSE.

"We have concluded that, for the time being, our resources are better deployed on business activities and technologies where we have the greatest knowledge and experience."

Although GDF and Iberdrola stepped in to acquire SSE's stake, analysts said the Perth-based group's decision not to enter the nuclear power market was a blow to government plans to boost atomic energy significantly in the coming decades, implying that for providers not already operating reactors, the business case does not stack up.

Lakis Athanasiou, an analyst at Evolution Securities, said: "This is further confirmation that implied government targets for nuclear power generation are wishful thinking with little basis in reality."

A government White Paper in July identified nuclear power as a crucial component in Britain's energy-generation mix, with the UK preparing to shut down a quarter of its generating capacity in the next 10 years as old coal and nuclear power stations close. Some £110bn is needed to build the equivalent of 20 large power stations to replace that capacity, while UK electricity demand is set to double by 2050.

The Government has announced plans to offer nuclear generators a fixed price for their electricity and to set a minimum price on power stations' carbon emissions.