Energy giant EDF prepares for nuclear future without Centrica

French group fears that British Gas owner could walk away from planned partnership

Mark Leftly@MLeftly
Sunday 01 April 2012 14:26

The French energy giant EDF is working up contingency plans should Centrica walk away from their joint venture to build a new wave of nuclear power stations.

The German partnership of RWE and E.on shocked the industry last week when it cancelled plans to build new UK reactors, leading to fears that the whole programme could eventually be shelved. Clean nuclear power has been the key plank in both the coalition's and the previous government's plans to tackle carbon emissions and the threat of an energy gap.

However, the Germans faced financial constraints in their domestic markets and so decided to sell on their joint venture, Horizon, which was to spend at least £15bn in building stations in North Wales and South Gloucestershire.

Whitehall officials believe the programme remains safe provided the EDF consortium ploughs ahead. EDF is the biggest player in UK nuclear power, operating eight of the existing, but ageing, reactors. The venture is the most far advanced in its planning: its first reactor, at Hinkley Point in Somerset, is due to be up and running by 2019.

It is also the only one of the three consortiums set up to develop the plants that has been at least partly led by a British company. The third, NuGen, brings together Spain's Iberdrola and France's GDF Suez.

EDF is thought to remain committed to the programme. In the wake of the Horizon news, EDF's chief executive, Vincent de Rivaz, said he was "determined to make UK new nuclear a success", adding that his company and Centrica "remained focused" on their proposed developments.

However, an industry source said that Centrica remains "agnostic" on the country's new nuclear programme. A key investment decision is due to be made later this year on whether it is sensible for the British Gas owner to put so much money into such a long-term project.

Although EDF is confident that Centrica will stay on board, executives are thought to be considering whether EDF could fund the stations itself if necessary. This would be financially risky, so other parties would probably be invited to take a stake.

Critics have seized on last week's Horizon announcement as further evidence that the coalition's energy plans are in disarray. Gary Smith, national secretary for energy at the GMB union, said: "The Government's energy policy is in an absolute mess. First, there was the renewables situation, then the solar tariff and now nuclear new build. They must get this sorted out soon to keep investors interested."

The Government is keen to get more reactors built because, by 2023, only one of the existing plants, EDF's Sizewell B, will still be operational. Although nuclear stations are costly to build and often fall behind schedule and go over budget, once running they are widely considered to be the cheapest source of clean energy.

A Whitehall source said: "The UK's new nuclear programme is one of the most advanced in the world with three developers planning to build 16GW of new reactors on five sites. This will provide a major boost in our drive to reduce carbon and add to security of supply at the lowest price."

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