Nuclear auction brings a little more clarity

29 April 2009

The UK land auction has finally ended. The sale worth over £387 million ($572 million) came with an announcement of plans for over 6000 MWe of new nuclear capacity.


Wylfa (BNG)
Wylfa, where EOn and RWE took a
combined plot of EdF and NDA land
Three parcels of land were at stake in the auction, organised by the Nuclear Decommissioning Authority (NDA). There was 178 hectares of land alongside the Wylfa site which comprised both NDA- and EdF-owned property, 119 hectares at Oldbury and 200 hectares at Bradwell. All the land was alongside NDA-owned legacy Magnox power plants.


A consortium of EOn and RWE npower took the first two packages, while an EdF development company took the Bradwell land. Between them the firms paid £387 million ($572 million) for the NDA to "help fund the cost of decommissioning."


One industrial group was disappointed: the consortium of GdF Suez, Iberdrola and Scottish & Southern. The trio confirmed it was still committed to new nuclear in the UK but had decided "in accordance with its technical, economic and financial criteria, not to make any further bids." It will instead concentrate on the eight other sites nominated in the government's Strategic Siting Assessment.


EdF now has a large tranche of land at Bradwell because the property just acquired comes in addition to land that its owns there through British Energy. The company is committed to selling this land, subject to certain levels of progress being made at its favoured sites, Hinkley Point and Sizewell, where pairs of EPRs are planned. EdF is also due to sell land at either Dungeness or Heysham as part of the agreement it made with the British government when taking over British Energy. A process to sell that land is expected within weeks.


EOn and RWE announced at the end of the auction that they are to establish a joint venture company to take forward their aims for over 6000 MWe of new nuclear capacity in the UK. Together with the 6400 MWe that EdF's plans represent, the two schemes would more than replace Britain's current reactor fleet and would provide over 25% nuclear electricity.


EOn and RWE did not reveal much about their plans. They remain open on the choice of reactor technology and stated only that the first of their units is to operate "around the end of the next decade."


The UK government lauded the NDA's monetary success as well as EOn and RWE's formal entrance: "The UK's new nuclear power sector gained a serious new player." Reactor vendor Westinghouse welcomed the end of the auction: "This news removes significant uncertainty, and will help to set out a clearer way forward for all parties."


The German utilities EOn and RWE already co-own three reactors in Germany. They said they would "push ahead with the creation of a strong joint venture." Andrew Duff, chief executive of RWE npower said: "We now expect and look forward to seeing equally strong commitment from the government to deliver efficient planning and technology licensing processes, effective resourcing of the nuclear regulator, and common standards and reference designs with the EU. This must be set in the context of a predictable, long term, regulatory framework for the energy markets."


Paul Golby, chief executive of EOn UK, added that "securing the land is simply the first step on a much longer journey as we look to decarbonise the UK power industry."