other news linkThere has been a setback to the government's plan to attract investment in new nuclear power stations.
That is after RWE Npower and E.On announced they will not develop new nuclear power projects in the UK.
The two were planning to invest in new plants in Anglesey and Oldbury, near Bristol, under a joint venture called Horizon Nuclear Power.
The government says it is disappointed but there remains "considerable interest" in the project.
The firms blamed problems raising finance for power projects and costs associated with decommissioning nuclear power plants in Germany.
Last May Germany decided to close down its nuclear power stations by 2022, following the disaster at Japan's Fukushima nuclear facility.
Company sources say there is a make-or-break decision to be made towards the end of the year by ministers on nuclear subsidies”
The two German firms formed Horizon Nuclear Power, which is based in Gloucester, in 2009.
It was working on plans for new nuclear power stations at Wylfa on the Isle of Anglesey and at Oldbury-on-Severn in South Gloucestershire.
They are two of eight new projects named by the government to replace the plants - about a quarter of the UK's generating capacity - which are due to close by the end of the decade.
Malcolm Grimston, an associate fellow at the Chatham House think tank, said: "It's a big deal that they are pulling out. If you look at the utilities in Europe then they are two of the biggest. There aren't that many huge players out there who could take over."
RWE and E.On want to find another company, or consortium, to take over the project.
Volker Beckers, chief executive of RWE Npower, said: "We continue to believe that nuclear power has an important role to play in the UK's future energy mix.
"We are therefore looking to ensure that work on development, including grid connection, can be taken up quickly by other potential investors."
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The government must urgently do everything possible to get Project Horizon back on track by finding a buyer to take over the project”
End Quote Kevin Coyne Unite union
Energy Minister Charles Hendry said: "E.On and RWE's withdrawal is clearly very disappointing, but the partners have clearly explained that this decision was based on pressures elsewhere in their businesses and not any doubts about the role of nuclear in the UK's energy future.
"The UK's new nuclear programme is far more than one consortia and there remains considerable interest.
"Plans from EDF/Centrica and Nugen are on track and Horizon's sites offer new players an excellent ready-made opportunity to enter the market," he said.
Welsh Secretary Cheryl Gillan said she had spoken to RWE. "I plan to meet them at the earliest opportunity," she said.
The UK's Nuclear Industry Association said: "We are confident that other investors will emerge to carry on the Horizon project."
Commercially viable?
RWE says it will continue to invest in low carbon technologies. It has also invested £1.6bn in gas-fired power stations in the UK.
The move by the German firms follows the decision last September by Scottish and Southern Energy (SSE) to pull out of a deal to develop a new nuclear power station.
The energy company sold its 25% stake in NuGeneration to partners GDF Suez and Iberdrola.
It said it wanted to focus on renewable energy.
Those moves come as analysts question whether firms can make money out of nuclear power in the UK.
Rhys Kealley, lead analyst at Datamonitor, said "How commercially viable these plants are is very questionable and even Centrica, who are partnered at the moment with EDF in a similar venture, is reluctant to make a commitment and they will be making a final decision on that some time before the end of the year."
The picture may become clearer in May when the government announces its plan to reform the energy market.
Measures will be introduced to encourage investment and create a balanced range of electricity sources.
BBC business editor Robert Peston says sources at the energy companies describe this as "a make-or-break decision" as to whether the government is prepared to abandon its previous position that there won't be any substantial subsidies for nuclear, either from taxpayers or customers.
'Urgent' action needed
Responding to the RWE-E.On announcement, Greenpeace's policy director Doug Parr said: "The government's energy strategy is crumbling.
"Not even the billions of pounds of taxpayers' money they have offered as incentives to the German and French nuclear industry are enough to make a new generation of power stations economically viable."
According to the union, Unite, the proposed nuclear power station at Wylfa could generate 5,000 jobs on Anglesey and support jobs at the Springfields fuel plant in central Lancashire.
Unite national officer Kevin Coyne said: "Britain needs Project Horizon to succeed for the sake of our future energy needs and thousands of skilled jobs which would be created as a result.
"The government must urgently do everything possible to get Project Horizon back on track by finding a buyer to take over the project."
The Prospect union, which represents some of the 120 highly-skilled employees working at Horizon's headquarters in Gloucester, as well as staff at the existing Wylfa site, expressed concern about the broader economic consequences.
"At a time when we face the closure of several large coal-fired power stations between now and the end of 2015, the Horizon venture was to be a major contributor in achieving a new UK fleet of nuclear power stations to provide a secure low-carbon energy supply for the future," said Mike Clancy, general secretary-designate of Prospect.
So the Germans won't be building any of our nuclear sites because the economic climate makes raising the finance too difficult despite all the massive state aid. This leaves state owned EDF as the last real contender for replacing our nuclear capacity and they have made no real plans for actually starting any work so it looks like we won't be seeing any of the planned sites coming on line any time soon. God bless private infrastructure!The glow of the UK’s nuclear future is looking a little less luminous today, after Horizon Nuclear Power, the German joint-venture between RNE Npower and E.On, decided to pull out of plans to invest in a new power station in Anglesey. Apparently, the financial crisis has made raising finance for projects as big as this too difficult. As well as Anglesey, they’ve also called a halt to a project at Oldbury-on-Severn in South Gloucestershire. Although the company says it’s looking for other investors to take on the project.
The financial crisis might not have been the only thing to put off RWE: it’s recently had to shell out for the decommissioning of its plants in Germany – so that might have caused it to think twice. But CEO Volker Beckers seemed optimistic, all things considered. ‘We continue to believe that nuclear power has an important role to play in the UK’s future energy mix,’ he said. ‘We are therefore looking to ensure that work on development… can be taken up quickly by other potential investors.’ So it doesn’t look as though the UK’s nuclear programme will grind to a halt quite yet.
It’s nevertheless a bit of a setback for climate campaigners, many of whom see nuclear power as the way to make the UK’s energy production greener. Especially as oil has become a tastier prospect, as crude oil prices start to drop, after a meeting between some of the world’s biggest oil buyers laid plans that could lead to Saudi Arabia releasing billions of barrels of oil onto the market. Eric Besson, France’s energy minister, confirmed today the country is in talks with the US, the UK and Japan to bring oil prices down.
Not that that will make much of a difference to those queuing at the pumps, after energy minister Ed Davey told drivers that they might just like to pop down to their local petrol station and top up their tanks, in case tanker drivers go ahead with strike action. Cue utter chaos. Davey’s comment that ‘we don’t think people need to change their behaviour very significantly… [but] people just need to do the sensible thing’ clearly hasn’t been taken quite in the relaxed spirit it was intended.