British Energy (BE) is to be sold to Electricité de France (EdF) for £12.5 billion ($23.1 billion). New nuclear reactors will be built at Sizewell and Hinkley Point while the government's proceeds from the sale should "more than cover" all BE's clean-up costs.
|Sizewell B: soon to be joined by two
reactors at Sizewell C (Image: BE)
The long-awaited announcements that came this morning have illuminated the next stage of the UK's new nuclear program.
EdF offered 774 pence for each BE share, valuing the firm at £12.5 billion ($23.1 billion). The government welcomed the deal: prime minister Gordon Brown said, "New nuclear is becoming a reality," adding that it was "clean, secure and affordable; its expansion is crucial for Britain's long term energy security as we reduce our oil dependence and move towards a low-carbon future."
The purchase would be made through EdF's subsidiary Lake Acquisitions, which has signed a memoradum of understanding to sell 25% of its stock to Centrica. That company would then have the right to 25% of any new nuclear plants' output and would provide a sizeable British-owned interest. Centrica said its potential purchase of the stake would be undertaken for a matching 774 pence per share.
The government's 36% stake in BE, which was one result from a £275 million ($510 million) investment during restructuring in 2005, returned a handsome £4.4 billion ($8.1 billion) for the Nuclear Liabilities Fund that actually held the stake. The government said that this, together with other holdings in BE which add up to about £8 billion ($15 billion): "should, at today's prices, more than cover the current estimated costs of decommissioning liabilities of British Energy's existing nuclear power stations."
EdF can now get on with planning in earnest to build four EPR nuclear power units at two new twin-unit power plants, Sizewell C and Hinkley Point C. The 1600 MWe units would contribute 13% of UK electricity in the early 2020s the government proudly revealed.
|Apart from Wylfa in Wales, nuclear sites
likely for new build are all in the south of
England. EdF plans reactors for Sizewell
and Hinkley Point, while land will be sold
alongside the other sites
While EdF has its prize of the two sites it valued most, the company has agreed - subject to plans at Sizewell and Hinkley Point going well - to sell land it acquired near the Wylfa plant as part of a back-up plan should it fail to take over BE. It should also sell land belonging to BE at Bradwell and Dungeness alongside land the Nuclear Decommissioning Authority owns which could afford further build opportunities at Bradwell and Oldbury.
The UK government wants at least two nuclear operators in the country, and would prefer at least two reactor designs to be in use.
European power giant EOn seems to be planning an Areva EPR of its own at Oldbury, having made an agreement with National Grid for a 1600 MWe connection. Meanwhile a US-based vendor with strong UK ties, Westinghouse, seems increasingly confident of its own part in the UK program. The Westinghouse AP1000 design has the support of Electrabel-Suez, Endesa, Iberdrola, RWE and Vattenfall.