Britain seeks investors to back new nuclear power plants

Thursday, March 6, 2008

The UK is committed to a dramatic and rapid expansion of nuclear power, ensuring new stations generate "significantly" more of the country's electricity than the existing stock, according to John Hutton, the business secretary.

In an interview with the Financial Times, Mr Hutton also dropped the UK government's previous commitment to maintaining a minimum 29.9 per cent stake in British Energy, the nuclear generator.

Ministers have previously refused to be drawn on the scale of investment in new reactors they hope to attract to the UK, saying it is for the market to decide. But Mr Hutton made it clear the government would pull out all the stops to maximise nuclear expansion. Replacing the UK's ageing stock of reactors is seen as vital to achieving the government's targets on cutting carbon emissions and reducing dependence on imported gas.

"We need the maximum contribution from nuclear sources in the next 10 to 15 years," Mr Hutton said. Asked if the government wanted the share of electricity generated from nuclear to increase beyond the current 19 per cent, he said: "That's the ambition . . . I'd be very disappointed if it's not significantly above the current level."

His statement underscores the profound change in sentiment among UK policymakers towards nuclear power, which after years of being derided is increasingly seen as a "clean" source of energy that does not involve the dependency on suppliers associated with gas or oil.

After nearly a decade of indecision over the contentious decision to support new nuclear reactors, the UK is now determined to fast-track the replacement of the 10 existing stations, all but one of which is due to close by 2023. The first new plant could be operational by 2017, a year ahead of the target set in a white paper in January. "If we can accelerate the timescale, we should," Mr Hutton said.

The government might sell its £2bn-plus stake in British Energy, Mr Hutton suggested. Ministers have previously said they would not sell down the state's 39 per cent stake in Britain's biggest electricity producer, to below 29.9 per cent.

British Energy is in talks with a number of companies about potential partnerships to build new plants. Investors are queuing up for the multi-billion pound construction programme, provided the government meets its commitment to "clear the decks" of regulatory obstacles, such as planning delays. Companies including EDF Energy, Eon UK, Centrica and RWE Npower, as well as British Energy, have signalled their interest in new nuclear build.

"We're in exactly the right place, I've been very encouraged by the reaction [from investors]," Mr Hutton said.

Copyright The Financial Times Limited 2008

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